DAVID GOLDMAN: Gold will soar as China seeks US dollar alternatives.

Investors have had little reason during the past dozen years to own gold rather than inflation-protected US Treasuries until now. If the United States and Europe can seize the assets of the Russian central bank by administrative fiat, without a declaration of war, Treasuries become a risky investment for a significant part of the world.

China alone owns $2 trillion of US Treasury securities.

How to respond to sanctions is the subject of intense debate in the Chinese media. “The United States and Europe should realise that sanctions are a double-edged sword,” economist Gao Desheng wrote on March 1 in the “Observer” (guancha.cn) website, a Shanghai-based news and opinion group that often reflects deliberations in China’s State Council.

“While hitting the Russian economy, sanctions will also harm Europe’s interests and weaken the independence and credibility of international organisations, including SWIFT,” the global messaging service for international bank transfers, Gao wrote. “For the United States, the frequent use of the financial sanctions weapon will accelerate the process of de-dollarisation of the world, which is tantamount to digging a grave for dollar hegemony.”

Everything is going swimmingly.