If China, Russia and OPEC sold their U.S. Dollar surpluses, they would inflict losses in these holdings on themselves in the process of undermining not just the U.S. but the global economy. Each could react in different ways:
1. O.P.E.C. oil producers are dependent on the States for the security of their sovereignty. The House of Saud dare not reject the Dollar oil price or they will lose the physical protection of the U.S. …However, this may be changing as we now hear the news of a new Gulf currency that may be used to price oil in. If this does happen, then a major nail will have been driven into the coffin of the $ as the global reserve currency.
2. Russia needs to maximize oil income to keep itself economically sound. So it will accept the Yuan from China but won’t reject the Dollar payments from other countries. It is diversifying reserves as far as it can without damaging the Dollar exchange rate and would love to jettison the Dollar, but for the sake of the value of its reserves and the stability of the world’s currency markets, including the Ruble market, it won’t. (As one Treasury Official said, the $ may be our currency, but it’s your problem.)
3. China is stuck with around $3 trillion in its reserves, firmly snared in the $ trap. It is unhappy with this and is diversifying as far as it can [including into gold]. Its unshakeable answer is to peg the Yuan to the Dollar and reap the benefits of sucking the manufacturing out of the States and selling it cheap goods. There will be no loosening of the ‘peg’ until the problem of China’s Dollar reserves are solved. It is therefore turning the disadvantage into an advantage that is bleeding the U.S. of its strength. By doing this, the advantage of a weakening Dollar to the States is neutralized.
[Excerpt from Gold Forecaster]