China’s Yuan Poised to Emerge as a Global Reserve Currency

Posted on 6th September 2023

Institutional investors are confident that China’s Yuan is on the cusp of attaining reserve currency status in multiple countries worldwide, marking a significant shift on the global economic stage, according to a comprehensive research study* conducted by Tresor Gold, a junior mining company headquartered in New York City, focusing on exploration and development projects in West Africa.

The international study, encompassing pension funds, private equity, venture capital professionals, family offices, and sovereign wealth funds, reveals that an overwhelming 93% of investors believe that China will successfully achieve reserve currency status for the Yuan within the next five years, with nearly one-third (30%) expecting it to be highly successful. Merely 2% anticipate the Yuan’s decline as a reserve currency.

A potential rise in the Yuan’s prominence as a reserve currency could trigger a depreciation in the value of the US dollar, leading to an increase in the price of gold. The dynamics at play suggest that all else being equal, a depreciating dollar may trigger a flight to quality, as investors reduce allocations to US dollar-denominated investments such as US stocks and bonds, and increase allocations to physical assets, like gold.

The Yuan’s adoption as a reserve currency finds strong support in China’s robust economic prowess and significant international trade flows, leading investors to believe that the country will persuasively convince central bankers worldwide to acknowledge the Yuan’s growing role.

IMF data** currently places the Yuan as the fifth-largest currency by proportion held in global foreign exchange reserves. However, its share of [2.39]% pales in comparison to the dominant position of the US dollar at [54.66]%, along with the Euro, sterling, and Japanese yen, all of which hold larger proportions.

The research conducted by Tresor Gold, encompassing perspectives from Canada, Australia, the US, UK, UAE, France, Germany, Switzerland, Qatar, and Saudi Arabia, underscores the influential role of China’s strategic alliances. These partnerships, notably with BRICS bloc nations such as Brazil, Russia, India, and South Africa, emerge as linchpins propelling the Yuan’s progressive ascent as a reserve currency. Notably, the combined economic prowess of these countries contributes a substantial 31.5% to the global GDP, surpassing the cumulative output of G7 nations at 30.7%. Within this paradigm, a resounding 25% of respondents strongly agree that these economic unions will firmly establish the Yuan’s status as a reserve currency, while an additional 72% moderately align with this prevailing sentiment.

Tony Lawson, Chief Executive Officer of Tresor Gold, commented, “IMF data shows the Yuan ranks as the fifth-largest currency in global foreign exchange reserves, but it still has a considerable gap to close compared to the US dollar and even the euro. However, with Algeria, Argentina, Bahrain, Egypt, Indonesia, Iran, Saudi Arabia, and the United Arab Emirates applying for BRICS membership, and other nations formally expressing interest, it’s clear that demand for the Yuan as a reserve currency is set to increase.”

Presently, Tresor Gold is raising capital to expand its Sierra Leone-based gold projects, aiming to achieve production over an 18-month period, and strategically acquire critical metal projects in West Africa. The company highlights Sierra Leone’s vast untapped mining potential, supported by a mining-friendly government, transparent policies, clean hydro power infrastructure, and accessible asphalt roads, connecting all mining regions.

Tresor Gold focuses its acquisition, exploration, and development efforts on commercial-grade gold and critical metal projects in West Africa, leveraging geotechnical data and AI-powered analytics to identify areas of promising mineralization. The company’s strong focus on positive sustainable impact and stewardship aligns with the Responsible Mining Principles outlined by the World Gold Council and the UN’s Sustainable Development Goals.

As an accredited U.S. Federal Government contractor, Tresor Gold presents itself as a strategic solution for both public and private sector interests across continental Africa, solidifying its position as a key player in the dynamic and evolving mining industry.