One of the primary reasons that Bitcoin saw a roller coaster ride over the past month was in large part due to Chinese depositors and investors using the crypto-currency as a mechanism to divest some of their Yuan denominated holdings to exchange them for assets in other currencies. But even as the Chinese government starts to crack down on Bitcoin exchanges, a representative for China at the World Gold Council believes that this money could eventually funnel its way into physical gold.
Chinese depositors have an estimated ¥22 trillion in cash held inside banks, and are looking for avenues to both invest and exchange out of in light of capital controls meant to keep the currency from offshore capital flight. And with the Shanghai Gold Exchange emerging last year as the world's largest physical gold market, acquisition of gold by the Chinese people is not a very difficult concept to fathom at all.
It’s inevitable that fairly soon – possibly even by the end of the year – the renminbi will be a floating currency. Moreover, either on its own or as part of a basket of currencies, a floating renminbi will be at least partially backed by gold. In other words, China is on an inexorable course to exert an economic stranglehold on the East. The world will then likely have two reserve currencies, one for the East and one for the West. - Stephen Leeb via King World News