China will soon introduce a crude oil futures contract denominated in yuan
and convertible into gold, the Nikkei Asian Review reported on September 1.
https://asia.nikkei.com/Markets/Com...world-order-with-oil-benchmark-backed-by-gold
-
Analysts say that since China is the world’s largest oil importer, the move
could deal a major blow to the global influence of the United States dollar.
The contract would allow oil exporting nations such as Russia, Iran and Venezuela
to conduct sales in yuan, instead of in U.S. dollars, and to then change the yuan
into gold on both the Hong Kong and Shanghai exchanges. This would also allow
these countries that often fall afoul of American foreign policy to circumvent dollar
-based U.S. sanctions.
-
The Chinese government has been developing the gold-backed futures contract
for years, and Oilprice.com reports that it is expected to launch this year.
China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold
China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold | OilPrice.com
-
It will be China’s first commodities futures contract available to foreign entities,
and analysts expect many oil-exporting nations and firms to find it appealing.
Leaders of oil exporting nations, such as Russia, Iran and Venezuela, have often
expressed desire to bypass the U.S. dollar.But avoiding the greenback has proved
challenging, largely due to the size of America’s economy, the dominance of U.S.
markets, and the momentum of time-honored global finance practices.
As much as these nations would like to see the curtain close on the U.S.-dominated
economic order, the Chinese yuan and other currencies have not garnered enough
international confidence to be viewed as trustworthy alternatives.
But since China’s new futures contract makes the yuan fully convertible into gold,
such misgivings would be allayed.“It’s a transfer of holding their assets in black liquid
to yellow metal,” said Grant Williams, a finance expert who advises Vulpes Investment
Management. “It’s a strategic move swapping oil for gold, rather than for U.S.
Treasuries, which can be printed out of thin air.”
Alasdair Macleod of Goldmoney told Nikkei that the gold conversion option would
“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.”
The Asia Times said, “The new triad of oil, yuan and gold is actually a win-win-win” for
China and the oil-exporting nations. “No problem at all if energy providers prefer to be
paid in physical gold instead of yuan. The key message is the U.S. dollar being bypassed.”
This bypassing of the U.S. dollar (usd) would be a win for China and many oil exporters,
but for the American economy, it could represent a catastrophic loss.
and convertible into gold, the Nikkei Asian Review reported on September 1.
https://asia.nikkei.com/Markets/Com...world-order-with-oil-benchmark-backed-by-gold
-
Analysts say that since China is the world’s largest oil importer, the move
could deal a major blow to the global influence of the United States dollar.
The contract would allow oil exporting nations such as Russia, Iran and Venezuela
to conduct sales in yuan, instead of in U.S. dollars, and to then change the yuan
into gold on both the Hong Kong and Shanghai exchanges. This would also allow
these countries that often fall afoul of American foreign policy to circumvent dollar
-based U.S. sanctions.
-
The Chinese government has been developing the gold-backed futures contract
for years, and Oilprice.com reports that it is expected to launch this year.
China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold
China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold | OilPrice.com
-
It will be China’s first commodities futures contract available to foreign entities,
and analysts expect many oil-exporting nations and firms to find it appealing.
Leaders of oil exporting nations, such as Russia, Iran and Venezuela, have often
expressed desire to bypass the U.S. dollar.But avoiding the greenback has proved
challenging, largely due to the size of America’s economy, the dominance of U.S.
markets, and the momentum of time-honored global finance practices.
As much as these nations would like to see the curtain close on the U.S.-dominated
economic order, the Chinese yuan and other currencies have not garnered enough
international confidence to be viewed as trustworthy alternatives.
But since China’s new futures contract makes the yuan fully convertible into gold,
such misgivings would be allayed.“It’s a transfer of holding their assets in black liquid
to yellow metal,” said Grant Williams, a finance expert who advises Vulpes Investment
Management. “It’s a strategic move swapping oil for gold, rather than for U.S.
Treasuries, which can be printed out of thin air.”
Alasdair Macleod of Goldmoney told Nikkei that the gold conversion option would
“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.”
The Asia Times said, “The new triad of oil, yuan and gold is actually a win-win-win” for
China and the oil-exporting nations. “No problem at all if energy providers prefer to be
paid in physical gold instead of yuan. The key message is the U.S. dollar being bypassed.”
This bypassing of the U.S. dollar (usd) would be a win for China and many oil exporters,
but for the American economy, it could represent a catastrophic loss.
