NEW YORK (TheStreet) -- Could gold, the world's longest running currency be used to create a new order in global currencies? The Chinese central bank is said to be considering backing its yuan with the yellow metal

This move, says Ken Hoffman, global head of metals and mining research for Bloomberg Intelligence, would be a "game changer."

Why would China consider such a move? Hoffman explains that Chinese policy makers are already trying to establish the yuan as a reserve currency, and backing it with gold would help attract foreign capital.

China is expected to receive approval from its central bank for a yuan-denominated gold fix, with a potential for an announcement as early as next week.

Hoffman explains that a gold standard would not necessarily create a big constraint to the Chinese central bank, as many believe.

"It could be at any price they fix. There's a lot of things that they can do to make this work," he says.

Hoffman estimates that to create an exchange rate of one ounce of gold for every $64,000, the country would need about 10,000 metric tons of the metal. "That's nine times the national official holdings and about 6 percent of all the bullion ever mined globally," Hoffman says.

Moving to a gold standard may also be a question of power for China. Hoffman says that when the U.S. adopted a gold standard after World War II, it emerged as the main power in the International Monetary Fund. In 1971, the U.S. ended the use of the gold standard and rendered the dollar a fiat currency.

If China decides to go into some form of a gold standard, Hoffman says it would make the rest of the world view the metal as a currency again.

"If they go for it, we'd be talking about fireworks," he says.

Comex August gold futures settled Thursday at $1,171.80 an ounce.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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