hey everyone welcome to my channel and welcome back to my subscribers this is where we talk about money saving and turning your hard earned money into wealth building assets this is bald guy money i'm bold guy let's talk money today i want to respond to a fantastic question slash comment that i received on my video called watch this before you buy china's digital currency digital yuan um here's what somebody who calls themselves the fuji wuji said in the comments uh which was actually very respectful and very much welcomed criticism of my point of view he said i respectfully disagree with baldguy's assessment in this entire nine minute segment he did not once mention gold or how it might potentially affect the popularity or desirability of a digital yuan it hasn't gotten a lot of attention as china has been doing it under the radar but china has been hoarding gold for the last 20 years and for a reason some experts say china might have amassed as much as 20 000 tons of gold by far the largest reserve of gold in the world he continued to say my guess is that china will violently unseat bitcoin as the go-to crypto by offering the world's first and only gold back digital currency that would be revolutionary and that is the general gist of what he said and to be honest the fuji wuji is not alone in having this opinion the opinion is actually very prevalent online but what is the truth about china's digital yuan and its relationship with gold and does it change my mind on whether or not i would buy it let's explore it together as always please just remember that none of this is financial advice i present my point of view using logic and math to help inform you the viewer about topics that matter and one little favor before we get started please i'm still trying to build my channel if you think my content is interesting please hit the like button and subscribe it increases the reach of my channel and it keeps me here doing my thing thanks so there is a lot of speculation about china's digital yuan and the speculation is about it being backed by gold and i can specifically find this on reddit online forums quora the list goes on and on the surface it sounds great even intriguing currency backed by gold china's secret strategy uh big launch at the 2022 olympics it almost makes you want to ask the question uh where can i get this digital yuan like right now until of course you do a little bit of research and find out that gold-backed crypto already exists and you don't even need to surrender all of your personal data to the chinese government in order to purchase it in fact here's a list of some top gold-backed crypto currencies that i found on coinmarketcap.com the first one is paxos gold the second one is perth mint gold token uh digix global you have tether gold tether actually is going to be audited soon so um you know that's one that you you know might be a little more transparent moving forward and you have meld gold by al goran so for full disclosure i do not own any of these and i prefer to own physical gold that said i trust the perth mint an entity that opens itself up to be audited uh and i trust them a lot more to provide me with a legitimate gold-backed uh cryptocurrency uh definitely more than i trust the secretive and deceptive chinese government to do so uh so the first point on this topic is that a gold back digital yuan is not actually a game changer unlike our commenter said especially considering that you are basically putting your faith in the chinese government that they actually have the gold they say they do which is actually a problem because we know they are lying about how much gold they have today more on that in a moment though the second fatal flaw in the idea that chinese is china is hoarding gold to launch a gold-backed digital currency or digital yuan is that they do not have nearly enough gold to confidently make this statement i had to do a bit of research to find out exactly how much gold china has and here's where the deception starts officially china says they have about two thousand tons of gold now we're talking metric tons one metric ton equals one thousand kilograms of gold but according to some very sleuthy journalism done by dominic frisbie at money week link to his article is actually going to be in the description so check him out too please uh he reckons that the official amount of gold they have is closer to twenty eight thousand nine hundred eleven metric tons of gold so what did i do for the sake of my calculations i naturally i rounded it up to thirty thousand tons of uh of gold just to be on the safe side to make sure that we are giving them a fair shake at understanding exactly whether or not they have enough gold to cover the actual dollar value of the current amount of currency they have in circulation and by the way this actually makes china the owners of the largest gold reserve in the world much more than the approximate 8 000 tons that the united states government holds so let's pull up the numbers that i that i crunched for this so as you can see here china's estimated gold reserve in metric tons was my generous 30 000. now if we convert that in the next column into kilograms that is 30 million kilograms of gold if we then convert that amount of kilograms into troy ounces that gives us 964 million five hundred thousand troy ounces of gold with the price as i'm making this video right now being one thousand eight hundred ten dollars per ounce of gold that gives them a total value of gold in united states dollar terms of 1 trillion 745 billion 745 million dollars so the most important numbers i take out of these are actually these two figures right here take a look china has 1.75 trillion dollars worth of gold which is assuming that the total value of all gold in the world is approximately 10 trillion dollars about 17.5 percent of the world's gold those are truly incredible numbers until you compare them to the actual supply of money as it stands today august 5th 2021 that exists in china as of today china has almost 10 trillion dollars worth of yuans in total m1 money supply m1 money supply for those of you who are unfamiliar with the term is the total amount of paper cash coins and bank deposits that are in the entire country so now if we do some simple math we clearly see this creates a major hole in the theory that the yuan will be backed by gold because they only have enough gold to cover 18 of their m1 money supply now you may be saying they could fractionally cover it which would still be good and sure i'll give you that point but wouldn't that make it worth only the fraction of gold that actually backs it up it certainly would in my eyes especially considering the fact that i can get gold-backed crypto from a reputable supplier like the perth mint right now very easily now for those of you also saying yes but they could just rebase their money and decrease their money supply to match the value of gold which will make it stable for those of you who studied basic economics which is also the title of my favorite thomas sowell book you'd know that a decrease in the supply of money also results in a decrease in demand of goods and spending which would be a major blow to the chinese consumer-driven economy something the government is actually trying to avoid by introducing the digital you want in fact because in some cases the digital yuans that they will be giving to people will have built-in restrictions in some cases limiting how long you can keep it for basically forcing you to spend the money within a particular period of time but the third and final blow to the goldbach digital yuan theory is that the chinese government ultimately wants control and having a hard currency backed by gold is not control not the way they understand it i know a lot of you out there watching this now stack precious metals i know you feel that it is real money and that it used to represent trust stability and freedom when it backed up the us dollar and those are concepts that are totally incompatible with the current chinese government and ultimately why their digital yuan will not actually or properly be backed up by gold so coming back to the comment that inspired me to make this video the concept of a gold-backed digital cryptocurrency already exists the chinese yuan would not be the first if the chinese government actually decided to go in that direction which again i don't think they can for the following reasons number one it requires transparency and auditing they would have to actually open the doors to their gold vaults and allow a third independent party to come in and check exactly how much gold they have to make sure they have as much as they say they have which again as i've shown in this video already we know that they have not been honest or transparent about how much gold they have up until this point number two they don't have enough gold to cover their current money supply as i said if you remember i showed that they only have enough gold to cover 18 of their current m1 money supply which means that either they would have to decrease their total money supply which would ultimately crash the chinese economy or they would have to fractionally cover their currency with gold or fractionally back up their currency with gold which would actually only give it the value that the gold which is fractionally backing it up has and the final third point is that it's all about control and gold doesn't give the chinese government control the chinese government wants to be able to allocate money to different places when they feel it's needed they want to be able to inflate the money supply to spur on chinese consumer spending when the time is right and having a gold-backed currency does not allow them to transparently or honestly do that now does all of that mean that they won't say the digital yuan is backed by gold well no it actually it doesn't guarantee anything they could say anything they want to say but in reality all you have to do is look at the logic and the math that i presented in this video to determine the truth and i have done a lot of work to present that to you in this video and just uh a point on the digital yuan violently unseating bitcoin as the top cryptocurrency you all know that i am an investor or a holder of bitcoin uh and uh please remember the comparison that i did between the yuan and the and bitcoin um here i'll put it up on the screen okay so as you can see the yuan is exactly stable versus the us dollar and and just so you know this comparison is from my old digital yuan video so if you're interested in checking that out please check that out in my videos so coming back to my point the u1 is stable versus the us dollar over the last 10 years whereas the yuan has lost 99.6 of its value versus bitcoin the digital yuan isn't bitcoin and it never will be also referring back to that old video that i did comparing bitcoin directly with the digital yuan let's pull up this graphic uh one more time okay so you can see bitcoin is decentralized transactions are private but transparent is a limited supply of 21 million coins and bitcoin historically increases in value so it is a store of value just like gold is a store of value it's not really a true currency okay the digital yuan is centralized controlled by the chinese government it's not private or transparent they have access to all the data of people who use it where they use it when they use it etc with respect to supply again even if they say it's backed by gold it does not mean that they cannot inflate the supply especially keeping in mind that we know they are not transparent about how much gold they're holding today there is nothing to lead us to believe that they'd be transparent about the amount of gold they are holding when they introduce the digital yuan and finally the the yuan as a currency itself is historically flat or in value or actually decreasing in value when you compare it to assets like bitcoin or gold it's a currency it's a fiat currency just like any other fiat currency and you shouldn't expect that the new digital form of the yuan would be any different than the old paper form of the yuan remember even if the chinese government says it's backed by gold we know better than that that's it from my side i'm currently working on a couple videos one of them is actually about how to build passive income via your assets but if there are any more requests or any ideas you guys have please drop them in the comments i'm active there in the comments so if you do drop me a comment i'll at least probably say hello to you link to my data sources in the description that's something i'm also very transparent about i take these videos very seriously and i take what i say to you all very seriously i'm not out here pushing lies i don't have an agenda like i said i'm just using facts logic math to talk about what matters to everybody so as i sign off as always i wish you all happiness i wish you success and i hope that i see you in the next one take care