Golden Yuan: Crude Backed By Gold is Here

Gold

I Missed it

- Vince Lanci

An apology is in order here to MS readers and my Soren K. brethren. I pride myself as a trader who can see the path once secular macro trends are in place. But I missed this one.

And it is very upsetting. No trade was missed, no trend was wrong. But the sheer surprise of the East's speed in implementation now scares me for the working man in the west.

What I saw as a test of Blockchain between Russia and China was much further along than originally seen. I missed it.

I forgot the other sign, that exchanges do best in regions of demand. Exchanges will accelerate USD death.

State-Owned Monopoly Beats "Free market" Capitalism Now

Deals are being done, Russia/china oil for gold using Blockchain over the past several months. A few months ago $3b trades that way. And the info I got was that the gold paid to Russia never left the Chinese vault.

The lesson learned for me is: what used to be communist bureaucracy throttling progress is now state owned capitalism that makes moves in unison.

Sure their people get screwed too, but what is our government doing to protect us? We are the pack mules bearing the burden of their errors in judgment and ethics.

Our government has abrogated its responsibility to citizens while lining its pockets from money given by US corps who are adjusting to new realities.

What can the public do? Buy stocks in the companies fucking them by outsourcing jobs, not paying taxes, and manipulating government officials like coin-pay vending machines. That's all we can do.

In the end the US citizenry will suffer and we are being hollowed out.

To get you up to speed:

Background

We have written many times on the potential for either a Gold backed Yuan, or a de-facto gold backed Yuan. We have written several posts on the how it could happen as well as its likelihood. Trade is now being done between Saudi Arabia, Chain and Russia in Yuan and Gold Bullion. And Blockchain is accelerating that change.

I have spoken on this at the last NY Mines & Money panel. (starts about 1 hour 30 minutes in)

The Bubba show had me on and we discussed this same topic.

China is long gold. Therefore it only makes sense they will use it to make payment for oil from Russian and the Saudis. It will either be gold or yuan with "implicit" gold backing.

This is active dedollarization of eastern trade. And will be the end of the petrodollar.

Turns out I was slow on the uptake here.

China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold

By Tsvetana Paraskova - Sep 01, 2017, 4:00 PM CDT

The world’s top oil importer, China, is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan, Nikkei Asian Review reports.

The crude oil futures will be the first commodity contract in China open to foreign investment funds, trading houses, and oil firms. The circumvention of U.S. dollar trade could allow oil exporters such as Russia and Iran, for example, to bypass U.S. sanctions by trading in yuan, according to Nikkei Asian Review. To make the yuan-denominated contract more attractive, China plans the yuan to be fully convertible in gold on the Shanghai and Hong Kong exchanges.

Last month, the Shanghai Futures Exchange and its subsidiary Shanghai International Energy Exchange, INE, successfully completed four tests in production environment for the crude oil futures, and the exchange continues with preparatory works for the listing of crude oil futures, aiming for the launch by the end of this year. ?

“The rules of the global oil game may begin to change enormously,” Luke Gromen, founder of U.S.-based macroeconomic research company FFTT, told Nikkei Asia Review.

The yuan-denominated futures contract has been in the works for years, and after several delays, it looks like it may be launched this year. Some potential foreign traders have been worried that the contract would be priced in yuan. Related: Texas Shale Hit Hard By Hurricane Harvey

But according to analysts who spoke to Nikkei Asian Review, backing the yuan-priced futures with gold would be appealing to oil exporters, especially to those that would rather avoid U.S. dollars in trade.

“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,” Alasdair Macleod, head of research at Goldmoney, told Nikkei.

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