China is using its yuan as its currency of choice in transactions with its hundreds of trading partners. In a slick way, China is displacing the dollar as its currency of trade. There is no doubt that, in its own good time, China is preparing to make the yuan convertible. The Russell prediction -- with China now the world's biggest producer and accumulator of gold, it's only a matter of time before the Yuan becomes the world's preferred currency rather than the dollar or the euro. I think the Chinese are going to part-back the yuan with gold. If you are an overseas investor, which would you rather have, a Federal Reserve Note backed by nothing and issued by a nation that is choking on debt, or a yuan part-backed by gold and produced by a nation with a the plane's largest positive trade balance?

Remember the "Golden Rule," ...... "Who has the gold, makes the rules." And China is in a headlong drive to produce and accumulate gold.

Today, both the Wall Street Journal and the Financial Times included feature stories on China's spreading use of the yuan with its trading partners while cutting out the dollar. This is most definitely a game-changer, and it foreshadows the ultimate fall of the dollar. All this is not lost on the price of gold, which has again pushed into the area above 1400.

Ultimately, I see the whole situation accelerating, leading to a worldwide panic out of dollars. This will correspond with the third speculative phase of the great gold bull market. Gold and silver will soar higher than anyone thinks possible. And remember, much of the world understands silver and gold and they are already into these metals. In the meantime, most Americans are totally oblivious of what's going on with the dollar, with gold, and with silver, and, I might add, with China.

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