Information cited in a leaked 2009 diplomatic cable from the U.S. embassy in Beijing shows the Chinese regime knew about American and European suppression of gold prices to maintain dollar hegemony, but that it was buying more of the precious metal anyway. The purpose of increasing its gold reserves, according to report cited in the document, was to encourage other nations to do likewise while making China’s currency more appealing internationally. Another effect of the strategy, analysts noted, would be to weaken the U.S. dollar’s status internationally.

Gold-price manipulation by Western central banks — and the Federal Reserve in particular — has been somewhat of an open secret for decades. But the cable released by WikiLeaks triggered significant interest among metals investors and analysts, some of whom expected the news to cause another surge in gold prices.

“Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the … leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status,” noted the financial analysis site ZeroHedge, adding that the news could encourage more mutual funds to purchase the precious metal.

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