China's Yaun/Gold backed Futures contracts

If the contracts are sustainable and are a success, what do you think the implications will be on brent and wti contracts?

Thoughts?

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I don't know about Brent and WTI but if the China futures turn out a success, they will be a major step ahead for the internationalization of the yuan. Which is the point.

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Beijing wants to make the yuan as international as the dollar as part of its Belt and Road initiative. or at least a bit more international than it is right now. They want to grow their influence globally (not that it's not already great) and having a currency that is used for international transactions is part of this initiative. In this sense, the futures could be only a start but here I'm only speculating. Maybe in several decades Brent will trade in yuans, you never know.

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3 hours ago, Marina Schwarz said:

Beijing wants to make the yuan as international as the dollar as part of its Belt and Road initiative. or at least a bit more international than it is right now. They want to grow their influence globally (not that it's not already great) and having a currency that is used for international transactions is part of this initiative. In this sense, the futures could be only a start but here I'm only speculating. Maybe in several decades Brent will trade in yuans, you never know.

Reason I ask, is because I've heard my share of conspiracy theories where China and Russia work together to become the reserve currency of the world, making the dollar effectively worthless.

Thank you for your time and knowledge!

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7 minutes ago, Mauricio Machado said:

Reason I ask, is because I've heard my share of conspiracy theories where China and Russia work together to become the reserve currency of the world, making the dollar effectively worthless.

Thank you for your time and knowledge!

Well, China and Russia have taken great strides at increasing their energy deals and cooperation. China has been buying into Russian energy projects for some time now. Oil trading in yuan will have more clout if they have their hands into Russia.

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(edited)

Lets make some maths .....

Daily World Oil demand : 90.000.000 barrel

Annual World Gold Demand (2017) : 4072 tonnes (that is total , bullions , coins , jewelry industry all!) 

a tonne equals 32151 troy ounces

Actual Gold Price 1350 $ / ounce (approx) 

Actual Oil Price 69 $ barrel 

Oil / Gold  relation is 20 barrel per ounce Gold. (actually)

90000000 barrel at 20 barrel per ounce ...

The daily Oil demand is worth 4.5 million  ounces of Gold (actually) 

Gold Demand annual 4072 tonnes at 32151 ounces per tonne equals 86126872 ounces per year 

Daily Gold demand  is 86126872/365 equals 235964 ounces per day.

Now compare actual daily Gold demand to actual daily Oil demand.

235964/ 4500000 makes roughly 5% 

At actual prices the Oil market can only be covered by 5% with the total of the actual Gold market. 

When Shanghai takes only 5% of the contracts and puts a gold guarantee on it , the actual Gold demand will be doubled!!!

the consecuences for the Gold market are now prone to the guess of everybody. 

 

 

 

 

 

 

 

Edited by Miguel Redondo
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Pakistan’s central bank announced recently that it will be replacing the dollar with the yuan for bilateral trade and investment with China. Expect more of this — devaluing of the dollar. Also, Russia is in control of Venezuela now with Maduro being Putin’s puppet of sorts, and is basically in hock to Russia. So, Putin has his thumb under the largest oil reserves in the world. How is he making use of that even with sanctions against Venezuela export of oil? Venezuela released its own cryptocurrency called the Petro. Russia, China and Iran are currently pursuing currency swap agreements to eliminate the US dollar from trade. China has also announced the launch of the petro-yuan to replace the greenback in oil transactions. What this means is, with the advent of cryptos, it represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil. Also expect the price of oil to continue to go up. Russia is now heavily invested in the crypto world while China still mines 85% of Bitcoin. Having crypto’s that are backed by oil reserves, gold, and other resources is the future. What is not the future is the U.S. dollar. China and Russia are slowly squeezing the U.S. out. 

 

What the rise of Russia in cryptos means is that even with sanctions imposed by the U.S. and the E.U., Russia will have a way to send and receive money. The U.S. Treasury Terrorism and Financial Intelligence unit can put sanctioned individuals on a blacklist that keeps them from doing business in U.S. dollars but since cryptos aren’t controlled by any state, it is easy to bypass any blacklist. But, the bigger picture is how it is challenging the global banking system. Disruption is inevitable, and cryptos could become the new driver of international business and financial transactions, and that will all start with trying to destroy the value of the U.S. dollar in trade relations and by using cryptos backed by oil and other natural resources. The U.S. and the U.S. dollar is on bended knee right now. China and Russia are moving to gold backed currency and each has issued home currency-denominated bonds in each other’s markets which will reduce the volatility of yuan and ruble exchange rates. There is an emergence of an eastern gold standard with natural resource-backed crypto kickers in the making. The U.S. dollar is dying.

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On 3/23/2018 at 9:40 AM, Mauricio Machado said:

Reason I ask, is because I've heard my share of conspiracy theories where China and Russia work together to become the reserve currency of the world, making the dollar effectively worthless.

Thank you for your time and knowledge!

 

That's not a conspiracy.

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On 3/24/2018 at 10:05 AM, Miguel Redondo said:

At actual prices the Oil market can only be covered by 5% with the total of the actual Gold market.

Only if you assume the the Gold/Oil Price fix at prices u stated..
Raise the price of gold X20.. And gold could cover the entire oil market..

Its not the amount of gold that exist thats the problem..
Its the suppressed price..


 

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Gold is the true global currency..

Therefore all global assets divided by all existing
gold ounces is the true price of gold per ounce..

China has all the gold..

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On 27/3/2018 at 4:43 AM, Structural Master said:

Its not the amount of gold that exist thats the problem..
Its the suppressed price..

That is exactly the point. 

I recommend to read: The case against thr FED , by Murray N. Rothbard

https://mises.org/system/tdf/The Case Against the Fed_3.pdf?file=1&type=document

In the last chapters you can see possible solutions to the actual Fiat-money problem.

On 27/3/2018 at 5:03 AM, Structural Master said:

China has all the gold..

Not exactly , but they are on the way to have the mayority. (with Russia) 

(See uploaded statistic from

https://www.gold.org/data/gold-reserves ) 

The biggest fear in this situation for the USD-holders is that Germany could change sides.

Germany has roughly the sum of Russia and China in its actual reserve.

The economic power of China , Russia and Germany combined (look at actual production of goods , not financial services) with its natural ressources (Siberia for example) would outclass the US with its allies largely. 

5 hours ago, Marina Schwarz said:

Russia's been buying a lot of gold lately, too.

Correct 

(see Image) 

Q1_2000_Q4_2017_Gold_Reserves__Tonnes.png

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28 minutes ago, Miguel Redondo said:

The economic power of China , Russia and Germany combined (look at actual production of goods , not financial services) with its natural ressources (Siberia for example) would outclass the US with its allies largely. 

 

This sums up nicely the reason for a lot of media and political noise in Europe and the U.S. lately. Thank you.

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(edited)

I doubt Chinas stated Gold reserves are A true accounting...
Surely understated.. Let it be an old relic.. for now..

Also...
The Feds holdings are in question... Lets count it...

 

Edited by Structural Master
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