Posted on 09/04/2017 9:54:08 PM PDT by Enlightened1
It’s a strategic move swapping oil for gold, rather than for U.S. Treasuries, which can be printed out of thin air. – Grant Williams
A report released by the Nikkei Asian Review indicates that China is prepared to release a yuan-denominated oil futures contract that is convertible (backed by) physical gold. The contract will enable China’s largest oil suppliers to settle oil sales in yuan, rather than in dollars, and then convert the yuan into gold on exchanges in Hong Kong and Shanghai.
This is a significant step in removing the global reserve currency status of the dollar and resetting the the global economic and geopolitical “landscape.” Over the past several years, China has quietly established yuan-based currency exchange facilities, which has set up the ability to implement this new non-dollar trade settlement financial instrument. According to the Brookings Institute, 34 Central Banks around the world have signed bilateral local currency swap agreements with the PBoC as of of the end of September 2016, including the major oil-producing countries. With this new contract, China’s largest oil suppliers will now be able to transact directly with China, and other oil importing countries, using yuan which are directly convertible into gold to settle the trade.
Since 1973, OPEC oil has been quoted and traded using to U.S. dollars, otherwise known as “petrodollars.” The “recycling” of petrodollars into U.S. Treasuries has been the life-blood of the U.S. economic and political system. In addition to reducing a major source of funding for the the U.S. Government’s enormous deficit spending, the introduction of a gold-backed yuan oil futures contract is an important step toward removing the dollar as the world’s reserve currency. More significantly it reintroduces gold into the global monetary system.
(Excerpt) Read more at investing.com ...
Go for it. Washington’s propensity to fund the deficit by rolling the printing presses has gone on long enough.
Good points. And if capitalism is such a superior system, why does a preeminent country such as the US institute so many socialist programs, rather than adhere to their capitalist ideology?
Gold IS special. It’s money.
Whereas the plastic or linen or cotton or electrons in our wallet are merely fiat currency. Every fiat currency in history has eventually reached its true value, which is zero.
The third world knows something that we have forgotten.
China has no oil and it’s debt to GDP is 300%. At least that is what is reported.
The US has more oil and natural gas than anybody and our debt to GDP is 100%. Our debt to GDP is a disgrace but China’s is insane.
Xi is a moron’s moron.
Gold ‘was’ money.
Today it’s just a yellow metal.
The only reason gold ever had value as money or currency is because an ‘entity of force’ made it so. Else it’s no different than a piece of rock, iron or lithium.
Although gold is rare compared to say silicon or quartz, so are many things such as natural pearls.
Gold is only money because an authority such as Caesar says it’s money. There is no other reason.
Gold is a store of value and has been money for over 3,000 years. Your fiat dollars are nothing but debt.
Gold is a ‘store of value’ you say, which storage is made at great expense.
Gold is only a value set by those that trade it. Those that trade it must monetize it in promissory note form in order to use it in transacting business or else physically transfer it at great risk and peril.
In other words, gold is a poor agent for transacting commerce.
Trade is vastly more efficient using contracts and courts to enforce contracts.
China falling to a gold standard is a step back into the dark ages. China has no rule of law hence must transact in gold to buy its oil supply from Dubai whose ruling families covet and demand gold, another dark age mentality group.
Gold is just a just a yellow metal of which a nugget is worth to advanced business practitioners about as much as a used wad of bubble gum.
There are many metals that are more rare and valuable than gold. Gold is nothing special regardless of how many years it was declared as money by the Romans and other civilizations. Those civilizations are long gone and are irrelevant to the terms of today’s advanced trade.
Bitcoin is an example of a crypto currency that is more valuable than gold because of its ease and low cost of security and speed of transaction.
Gold is a primitive dark age concept. We can’t eat it or use it to heat our homes. It has very limited practical use that is not already filled by computing metals.
“Initially yes but the long term effects of it would be that we are no longer the world’s reserve currency. That would be very bad for us.”
Poppycock. There’s as much bad as good involved with having reserve currency status. People hyperventilate about the idea of that without ever justifying exactly what they are afraid of.
Look at it this way; is every other country with non-dollar currency currently suffering? Are we currently unfairly benefiting?
It is more than that, neither the Chinese Communist Party nor its government is truly transparent. Investors do not really know what is going on behind the scenes of a inherently closed system. We do know that there is a lack of respect for intellectual property, heavy state involvement in the economy (which includes competing with private businesses), and an arbitrary bureaucracy that can and will punish private companies for arbitrary reasons.
The U.S. political system and government are generally open. While there is skullduggery and dishonesty, it only affects policy at the margins. For all our faults, we still have one of the most open and (compared to most nations) honest political system.
The dollar is the world reserve currency because the alternatives are all much worse. Offering yuan denominated futures contracts will appeal to a niche market, not the broader investment community.
There is another reason. Gold is money because over 2 billion people in China, India, and Russia think it is money. And they hoard it in India, in spite of the actions of their government.
Shuuuuuuuuuuuuuuuuuuuuuuuurrrrre...............
Let’s us ALLL trust the Chinks.
What could POSSIBLY go wrong with that?
The future growth of global trade is east of Suez. The trade in that region can get along quite well trading oil for gold and yuan for goods.
The gold is intermediate to the secondary trade in goods flowing in the other direction
Each one of those countries has no effective rule of law. They are primitive in business dealings.
I was approached by Indian Indians who asked me to consider facilitating bond issuances via my Wall St. S&P contacts for gold held in the trillions stashed in temples in India. I told them to forget it. Unless they were to transport their gold to safe keeping inside a top international bank and to pay the security fees, no gold-backed bonds would ever see the light of day with their gold numbers. They were not going to transport their gold. Hence, their gold gathers dust as a worthless metal.
Primitive cultures and mentalities including UAE have an idiotic obsession with gold because they are not yet first world transaction agents. So they have to monetize their gold in some way and they have great difficulty because of issues of trust. They hesitate to even allow inspections of their gold hoards.
Gold is a pain in the ass period.
There are great problems with using gold because no one wants to show it and no one wants to move it.
I know the types of people from that region quite well. They are a colossal waste of time. Trust me, you can do better in 10,000 other things than dealing with those idiots and their gold talk.
There is nothing east of Suez that is needed for essentials. Unless you are talking about opium derivatives which are worth more than gold, there is nothing there to consider.
Bitcoin is subject to extreme third party counter risk and can disappear in a single keystroke. When all your fiat currency collapses remember the golden rule. Those who hold the gold make the rules.
Sayings or slogans such as the Golden Rule = He who has the gold makes the rule are irrelevant and serve only to demonstrate sophomorical aptitude.
When the idiot lemmings climb on the NK scare to come and pile into gold paper, find a way to short them because they will crash and hurt.
The best way to play gold is to bet against the morons that buy into it.
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