Saturday, September 2, 2017

China ready to crush the petrodollar and reserve currency with new oil contract backed by Yuan and gold

On Sept. 1, a new report out of Asia is signaling China is ready to make their next move against the Petrodollar, and the next step in their plans to bring about a return to gold backed finance.

According to sources, China is preparing to roll out a new oil contract that will be denominated in Yuan, and convertible with physical gold.  The collaboration will take place between the two markets of the Shanghai Gold Exchange and the Shanghai International Energy Exchange.

China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry. 
The contract could become the most important Asia-based crude oil benchmark, given that China is the world's biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars. 
China's move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong. 
"The rules of the global oil game may begin to change enormously," said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT. 
China has long wanted to reduce the dominance of the U.S. dollar in the commodities markets. Yuan-denominated gold futures have been traded on the Shanghai Gold Exchange since April 2016, and the exchange is planning to launch the product in Budapest later this year. 
Yuan-denominated gold contracts were also launched in Hong Kong in July -- after two unsuccessful earlier attempts -- as China seeks to internationalize its currency. The contracts have been moderately successful. 
The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. "It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either," Macleod said. – Nikkei Asia
This plan to replace the Petrdollar has been at least four years in the making, and below is a transcript of an article I wrote back in 2013 regarding this scenario.

7 comments:

China doesn't want the dollar collapsing any more than the US does. What a nonsense article.

Arrogance to think others around the world can function without us

yuan backed by us 98%? unpayable american debt

NK and the Yuan back by gold is the tip of the iceberg.China holds 1.3 trillion dollars in US treasury bonds,If we default,no one will buy worthless treasury bonds.James Dale Davidson (advisor to four US presidents) said the day of reckoning is coming,we can not keep printing money.Why not be friends,end the Korean War and borrow the 1.3 trillion dollars to rebuild all our decaying infrastructures.

I suspect some info is missing here. Jim Willie on the Goldenjackass explains that China and Russia along with other countries are dumping their dollars (in the form of treasury bonds) faster than hyperspace. They're paying for everything possible in treasuries. Russia has less of a problem since the sanctions they have had lots of time to unload and couldn't take on dollar securities even if they wanted to. Iran has serious skin in the game since they don't have any treasuries. Israel is at economic defcon 3 in case we crash. Prices are going up steadily here no matter what the media says, food, clothing has made wapping jumps. Pants that used to be $30- $40 are now $70-$90 in a year or so. This is consistent with Willie's position that we're beginning to see shortages and it will get worse. Lots of stores are carrying Chinese produce now, a truly sneaky way for the Chinese to anchor the yuan through food shortages. Don't kid yourselves. This is coming. Open your eyes.

Post a Comment