Author Topic: China Puts Oil on a Gold Standard  (Read 1170 times)

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Offline thackney

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China Puts Oil on a Gold Standard
« on: September 06, 2017, 03:53:34 pm »
China Puts Oil on a Gold Standard
https://www.moneymetals.com/news/2017/09/05/china-oil-gold-standard-001150
September 5th, 2017


The Chinese are preparing to launch an oil futures contract denominated in yuan and redeemable in gold. That is very bad news for the petro-dollar and for U.S. hegemony in the oil trade. The ability to sell oil on Chinese exchanges for yuan will take the potency out of U.S. sanctions levied on nations such as Russia and Iran.

The gold backing of those contracts figures to lure participants from around the globe – even those with strong ties to the U.S. This additional enticement will go a long way toward allaying concerns of those who may see the dollar as superior to the yuan in trade.

The move is another sign of the Chinese commitment to ending the dollar’s reign as the world reserve currency....
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Offline thackney

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Re: China Puts Oil on a Gold Standard
« Reply #1 on: September 06, 2017, 03:56:28 pm »
https://asia.nikkei.com/Markets/Commodities/China-sees-new-world-order-with-oil-benchmark-backed-by-gold

...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....

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Offline Suppressed

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Re: China Puts Oil on a Gold Standard
« Reply #2 on: September 06, 2017, 03:56:52 pm »
This is pretty huge.
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Re: China Puts Oil on a Gold Standard
« Reply #3 on: September 06, 2017, 04:00:18 pm »
This is pretty huge.

It is, and if it takes off have the ability to substantially impact the dollar.
The Republic is lost.

Offline Weird Tolkienish Figure

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Re: China Puts Oil on a Gold Standard
« Reply #4 on: September 06, 2017, 06:27:29 pm »
It is, and if it takes off have the ability to substantially impact the dollar.

Which is mixed. If the dollar tanks, then that will make our exports cheaper, which is good for workers, but bad for consumers. And vice versa.

Pick your poison.

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Re: China Puts Oil on a Gold Standard
« Reply #5 on: September 06, 2017, 06:54:47 pm »
Which is mixed. If the dollar tanks, then that will make our exports cheaper, which is good for workers, but bad for consumers. And vice versa.

Pick your poison.

Trump is getting great mileage out of the dollar tanking since he took office.  It's making exports go up.
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Re: China Puts Oil on a Gold Standard
« Reply #6 on: September 06, 2017, 07:52:47 pm »
Which is mixed. If the dollar tanks, then that will make our exports cheaper, which is good for workers, but bad for consumers. And vice versa.

Pick your poison.

In a situation where we didn't have huge fiscal and trade deficits and oceans of our currency out there, that may hold true. This is a much different scenario, because we are in a MAD financial arrangement with China and the rest of the world. We buy their goods, they invest in our markets, propping up what should be a weak dollar, which is also the world's reserve currency and the denomination for most of the world's important commodities.

Essentially that situation has allowed us to run highly inflationary policies and more or less get away with it. Link the yuan to oil and gold and that all changes. If those become the preferred currencies, the dollar could crash to a small fraction of it's value. It won't help our imports because we won't be operating in the global market with dollars anymore, wages and prices will simply adjust to the new reality of a far less valuable dollar, assuming we don't go the way of Zimbabwe.

It will knock the crap out of our markets and banking system, and will crater govt spending to the point where I don't know if DC could hold the country together.
The Republic is lost.

Offline Weird Tolkienish Figure

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Re: China Puts Oil on a Gold Standard
« Reply #7 on: September 06, 2017, 08:05:54 pm »
In a situation where we didn't have huge fiscal and trade deficits and oceans of our currency out there, that may hold true. This is a much different scenario, because we are in a MAD financial arrangement with China and the rest of the world. We buy their goods, they invest in our markets, propping up what should be a weak dollar, which is also the world's reserve currency and the denomination for most of the world's important commodities.

Essentially that situation has allowed us to run highly inflationary policies and more or less get away with it. Link the yuan to oil and gold and that all changes. If those become the preferred currencies, the dollar could crash to a small fraction of it's value. It won't help our imports because we won't be operating in the global market with dollars anymore, wages and prices will simply adjust to the new reality of a far less valuable dollar, assuming we don't go the way of Zimbabwe.

It will knock the crap out of our markets and banking system, and will crater govt spending to the point where I don't know if DC could hold the country together.

This is the kind of crap that the idiots at Zerohedge have been spewing for years. it's never come true.

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Re: China Puts Oil on a Gold Standard
« Reply #8 on: September 06, 2017, 08:31:41 pm »
This is the kind of crap that the idiots at Zerohedge have been spewing for years. it's never come true.

What does that even mean? Call it tinfoil and that settles it? That's a wonderful belief, but not an economic argument.

What do you think would happen if we lost our status as the world's reserve currency?
The Republic is lost.