Trading Oil for Gold: China’s Gold-Backed Petro-Yuan Market, Threatens the US Dollar?

[The SC]

China recently announced they will trade oil for yuan “backed” by gold. The story has gotten some press (none of it mainstream mind you), and many have questions as to what it really means. While quite complicated as a whole, when you break this down into pieces I believe it is a quite simple and logical end to Bretton Woods.

For a background, China has had an exchange open for about a year where gold can be purchased with yuan, though the volumes so far have been miniscule to this point.

China has also been all over the world inking trade deals (in yuan) and investing in all sorts of resources from oil to gold to grains, they have made no secret about this.

With the most recent example here. They have trade arrangements and treaties with Russia, Iran and many other non Western nations. They have also “courted” many Western nations privately (remember their meeting with the King of Saudi Arabia?) and actually lured many with their “Silk Road” plans via the AIIB which was huge news last year (but nearly forgotten by Americans at this point?).

We also know China has been a huge importer of gold for the last 4-5 years and done so publicly via Shanghai receipts and deliveries.

So what exactly does “oil for yuan” mean? In my opinion, China is basically leading a “mutiny FOR the bounty” (we’ll explain this shortly). The only things holding the dollar up from outright death for many years has been the oil trade (and other trade commerce) between nations and settled in dollars. Anyone wanting to buy oil had to first buy dollars in order to pay for the trade. Anyone getting out of step and suggesting they would accept currency other than dollars was dealt with swiftly and harshly (think Saddam and Mohamar). In other words, the U.S. military “enforced” the deal Henry Kissinger made with the Middle East (lead by Saudi Arabia) where ALL oil was settled in dollars. International trade settlement alone supported the dollar after the Nixon administration defaulted on its promise to exchange one ounce of gold for $35.

China is now suggesting THEY will be the ones to trade oil and not use the dollar for settlement. Instead, settlement will be in yuan. But why now?

I believe for one of two reasons or more likely both. First, and as we have recently spoken about, it very well may be that the US military technology has been cracked or leap frogged. It is looking like a distinct possibility and if so, China/Russia now have less fear of U.S. military “retribution”.

The other possibility pertains to gold. We have no way of knowing whether or not the “bottom of the barrel” as far as gold reserves is in sight but we can have a pretty good idea.

Physical demand for gold has exceeded mine supply by some 1,500 tons for the last 20 years, “Scrap” supply can not have made up the shortfall. The only place the gold to supply for delivery can have come from are Western (think Ft. Knox) vaults. If the Chinese know their “supplier” of gold is at or near zero, this could also explain “why now”. My bet is both, military technology AND lack of gold supply are at work here.

The next question is this, does China want to become the world’s reserve currency? I do not think so as they have seen economies of the issuers of the reserve currency destroyed time after time throughout history. Rather, China wants to lead the parade away from the dollar or at least steer it. Whether via a larger slice of the SDR pie, or another as yet to be introduced currency I do not know.

What we do know: the U.S. is broke and very likely nearly out of gold. The U.S. has “led” the world with an iron fist and trampled many in its wake …pissing off nations all the while over the last 20+ years in particular. China knows this and also knows the rest of the world will follow them just as school kids will follow the one who stands up to the school bully. Besides, on the surface it certainly looks like better (more fair) trade and settlement terms for anyone who goes along.

Wrapping this up, we need to know “what” all this means? Most importantly it means the world will have an alternative to settling in dollars …which means less overall demand for dollars. This alone will weaken the dollar much further than the huge move we have already seen. A weaker dollar will mean much higher prices (inflation) for the imported goods we no longer manufacture at home.

There is a bigger problem here that few are thinking of yet. How will the U.S. settle trade if the dollar becomes so weak it becomes shunned …AND we have no gold for international settlement left? This is a very serious question and one pertaining directly to the standard of living for Americans.

Answering the question as to the meaning of “mutiny for the bounty”, this is simple. You can think of “bounty” as “prosperity” if you will. Prosperity in today’s world means you produce goods and trade, trade, trade! By and large I believe the world wants peace and prosperity …which go hand in hand and are not mutually exclusive. If the world is offered a “more fair” way to settle trade, will they go for it? You bet! Especially if they are offered “cover” or protection from the U.S. military …for trading in a currency they deem more fair than dollars!

So it seems to me, China is leading a world that is ready to follow in a direction away from dollars. As for gold, it will explode in price in terms of a weakening dollar but there is potentially more. China without ANY DOUBT is THE largest holder of gold on the planet. It is for this reason China now has the ability to “price” gold wherever they want to. In other words, China can mark the price of gold to the moon which will do several things. It will make them the wealthiest nation on the planet while at the same time making it extremely expensive and difficult for anyone to catch up by amassing their own gold horde.

As to the yuan becoming gold backed, I doubt it in reality. I highly doubt they will ever “exchange” their current gold horde. It is more likely they will only exchange further gold accumulated from this point forward but that is a story for another day.

We have speculated for several years that China might try to supplant the dollar. It now makes sense and one would have to wonder why they wouldn’t lead the mutiny if they were to become the new captain?

https://www.globalresearch.ca/tradi...o-yuan-market-threatens-the-us-dollar/5608136

 

[nang2]

not until china becomes a champion of free trade and a sincere protector of private property.

 

[Hakikat ve Hikmet]

Now is the time for the USA to panic!!!!! They need to get back to the basics of being "fair and good" what she promised to begin with....

 

[AndrewJin]

Now is the time for the USA to panic!!!!! They need to get back to the basics of being "fair and good" what she promised to begin with....

US regime has to be fair and good to their own people first...
People first instead of war/conflicts/hegemony first

 

[Taimoor Khan]

I have mentioned this many times over in different discussions here on this forum the importance of this tectonic shift which it seems hardly anyone is bothered about in Pakistan or in its media. Government of Pakistan is as usually taking their nap with its finance minister on the run!

This is not something which came out of the blue. Here is a article written way back in 2009 by Robert Fisk.

http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

Putin ordered all Russian ports to stop accepting dollar as currency and Venezuela, a OPEC member has dumped dollar in favor of Yaun. All these development happened just within last week! Anyone with common sense will see that all this is planned and following a meticulous strategy. Dont be surprised if the Saudis, the main backer of Petro dollars themselves start trading their oil, atleast with China, in Yaun. After all, who will like to lose the world biggest oil market at a time when Western world is moving away from fossil fuel to electric and renewable energy?

There are reasons why Trump is blowing gasket over North Korea (NK share border with both China and Russia). America is desperate for war to some how stall this phenomena.


As for Pakistan, we need to wake up and wake up quickly!!

From the article:

So it seems to me, China is leading a world that is ready to follow in a direction away from dollars. As for gold, it will explode in price in terms of a weakening dollar but there is potentially more. China without ANY DOUBT is THE largest holder of gold on the planet. It is for this reason China now has the ability to “price” gold wherever they want to. In other words, China can mark the price of gold to the moon which will do several things. It will make them the wealthiest nation on the planet while at the same time making it extremely expensive and difficult for anyone to catch up by amassing their own gold horde.

Which mean the monopoly of JP Morgan/COMEX/London Gold Fixing, to suppress the precious metals prices will end. Which means those individuals, vested groups and nations who have been hording PHYSICAL gold will become very rich. Gold will not be traded on current $1312 per ounce but somewhere around the region of $10000 per ounce as per the experts of precious metals.

I implore to the deep state of Pakistan. Screw the government of Pakistan. WAKE UP! For heaven sake when we will start mining this gift of Allah to us?

Time to start mining Reko Diq on war footing was yesterday, not today. Pakistan need to start churning gold bullion out of these mines and start stacking in our state vaults as a matter of extreme and immediate strategic importance, at par with our nuclear program. Lethargy, incompetence , time wasting , slacking is not an option anymore.

 

[djsjs]

The United States has been running for Over 200 years.No Dynasty can be determined not to fall.It's time for America to decline.Maybe a few decades later, The United States will split into many small countries like Europe.

 

[Taimoor Khan]

https://www.dawn.com/news/1359324/saudi-arabia-to-join-cpec-ambassador-tells-pakistani-media-group

'Saudi Arabia to join CPEC,' ambassador tells Pakistani media group


Another nail in petro dollar coffin.

Expect Saudi oil getting transported to China via CPEC and I can bet it will be traded in gold backed Yuan.

 

[Tang_BJ]

China recently announced they will trade oil for yuan “backed” by gold. The story has gotten some press (none of it mainstream mind you), and many have questions as to what it really means. While quite complicated as a whole, when you break this down into pieces I believe it is a quite simple and logical end to Bretton Woods.

For a background, China has had an exchange open for about a year where gold can be purchased with yuan, though the volumes so far have been miniscule to this point.

China has also been all over the world inking trade deals (in yuan) and investing in all sorts of resources from oil to gold to grains, they have made no secret about this.

With the most recent example here. They have trade arrangements and treaties with Russia, Iran and many other non Western nations. They have also “courted” many Western nations privately (remember their meeting with the King of Saudi Arabia?) and actually lured many with their “Silk Road” plans via the AIIB which was huge news last year (but nearly forgotten by Americans at this point?).

We also know China has been a huge importer of gold for the last 4-5 years and done so publicly via Shanghai receipts and deliveries.

So what exactly does “oil for yuan” mean? In my opinion, China is basically leading a “mutiny FOR the bounty” (we’ll explain this shortly). The only things holding the dollar up from outright death for many years has been the oil trade (and other trade commerce) between nations and settled in dollars. Anyone wanting to buy oil had to first buy dollars in order to pay for the trade. Anyone getting out of step and suggesting they would accept currency other than dollars was dealt with swiftly and harshly (think Saddam and Mohamar). In other words, the U.S. military “enforced” the deal Henry Kissinger made with the Middle East (lead by Saudi Arabia) where ALL oil was settled in dollars. International trade settlement alone supported the dollar after the Nixon administration defaulted on its promise to exchange one ounce of gold for $35.

China is now suggesting THEY will be the ones to trade oil and not use the dollar for settlement. Instead, settlement will be in yuan. But why now?

I believe for one of two reasons or more likely both. First, and as we have recently spoken about, it very well may be that the US military technology has been cracked or leap frogged. It is looking like a distinct possibility and if so, China/Russia now have less fear of U.S. military “retribution”.

The other possibility pertains to gold. We have no way of knowing whether or not the “bottom of the barrel” as far as gold reserves is in sight but we can have a pretty good idea.

Physical demand for gold has exceeded mine supply by some 1,500 tons for the last 20 years, “Scrap” supply can not have made up the shortfall. The only place the gold to supply for delivery can have come from are Western (think Ft. Knox) vaults. If the Chinese know their “supplier” of gold is at or near zero, this could also explain “why now”. My bet is both, military technology AND lack of gold supply are at work here.

The next question is this, does China want to become the world’s reserve currency? I do not think so as they have seen economies of the issuers of the reserve currency destroyed time after time throughout history. Rather, China wants to lead the parade away from the dollar or at least steer it. Whether via a larger slice of the SDR pie, or another as yet to be introduced currency I do not know.

What we do know: the U.S. is broke and very likely nearly out of gold. The U.S. has “led” the world with an iron fist and trampled many in its wake …pissing off nations all the while over the last 20+ years in particular. China knows this and also knows the rest of the world will follow them just as school kids will follow the one who stands up to the school bully. Besides, on the surface it certainly looks like better (more fair) trade and settlement terms for anyone who goes along.

Wrapping this up, we need to know “what” all this means? Most importantly it means the world will have an alternative to settling in dollars …which means less overall demand for dollars. This alone will weaken the dollar much further than the huge move we have already seen. A weaker dollar will mean much higher prices (inflation) for the imported goods we no longer manufacture at home.

There is a bigger problem here that few are thinking of yet. How will the U.S. settle trade if the dollar becomes so weak it becomes shunned …AND we have no gold for international settlement left? This is a very serious question and one pertaining directly to the standard of living for Americans.

Answering the question as to the meaning of “mutiny for the bounty”, this is simple. You can think of “bounty” as “prosperity” if you will. Prosperity in today’s world means you produce goods and trade, trade, trade! By and large I believe the world wants peace and prosperity …which go hand in hand and are not mutually exclusive. If the world is offered a “more fair” way to settle trade, will they go for it? You bet! Especially if they are offered “cover” or protection from the U.S. military …for trading in a currency they deem more fair than dollars!

So it seems to me, China is leading a world that is ready to follow in a direction away from dollars. As for gold, it will explode in price in terms of a weakening dollar but there is potentially more. China without ANY DOUBT is THE largest holder of gold on the planet. It is for this reason China now has the ability to “price” gold wherever they want to. In other words, China can mark the price of gold to the moon which will do several things. It will make them the wealthiest nation on the planet while at the same time making it extremely expensive and difficult for anyone to catch up by amassing their own gold horde.

As to the yuan becoming gold backed, I doubt it in reality. I highly doubt they will ever “exchange” their current gold horde. It is more likely they will only exchange further gold accumulated from this point forward but that is a story for another day.

We have speculated for several years that China might try to supplant the dollar. It now makes sense and one would have to wonder why they wouldn’t lead the mutiny if they were to become the new captain?

https://www.globalresearch.ca/tradi...o-yuan-market-threatens-the-us-dollar/5608136

You missed an important country ,Qatar .
Why Qatar is being targeted, petro-yuan .

 

[jhungary]

Another thread about "Petrol-Yuan" lol........

You can all buy oil from Yuan or gold you like, it won't make a dent on US Dollars.

Trading Commodity (such as gold, oil, silver and meat) and so on only ever used up 5% of total USD market, the majority of the USD trade in SWIFT International Transfer (Which is where 86% of all USD goes), the majority of SWIFT customer is Central Bank around the world.

Let's compare the value of Commodity Trade, according to International Trade Center, the whole year of Commodity Trade in US Dollar value is at 7 Trillions Dollars for the whole year in 2012, in that 7 trillions, only 2.1 trillions dollar has gone to Trading ALL Energy Resource (Which is all type of energy resource, include oil, gas, ethanol, propane and battery acid). According to SWIFT and BIC, the US dollar settlement in SWIFT Payment is 5 trillions A DAY in 2015.

Even if all oil from now on is settle using Yuan, the impact to US Dollar is neglectable

 

[ahtan_china]

Another thread about "Petrol-Yuan" lol........

You can all buy oil from Yuan or gold you like, it won't make a dent on US Dollars.

Trading Commodity (such as gold, oil, silver and meat) and so on only ever used up 5% of total USD market, the majority of the USD trade in SWIFT International Transfer (Which is where 86% of all USD goes), the majority of SWIFT customer is Central Bank around the world.

Let's compare the value of Commodity Trade, according to International Trade Center, the whole year of Commodity Trade in US Dollar value is at 7 Trillions Dollars for the whole year in 2012, in that 7 trillions, only 2.1 trillions dollar has gone to Trading ALL Energy Resource (Which is all type of energy resource, include oil, gas, ethanol, propane and battery acid). According to SWIFT and BIC, the US dollar settlement in SWIFT Payment is 5 trillions A DAY in 2015.

Even if all oil from now on is settle using Yuan, the impact to US Dollar is neglectable

It is good news as you comment. We hope OPEC will release the oil price with China Yuan. Thanks!

 

[jhungary]

It is good news as you comment. We hope OPEC will release the oil price with China Yuan. Thanks!

Actually, that's bad for China.

You can only have a certain amount of Yuan in circulation at a given moment, if you need more (to pay off debt to creditor) then you will depreciate the value of Yuan. Unlike US dollar, Yuan bond is not at all popular and did not have enough push to settle the spike on Yuan Demand. Which mean one of the two things will happen if OPEC drop USD and uses Yuan in the near future.

1.) China need to print more money so to allow other country to trade with Yuan (less than 2 Trillion each year) and hence depreciate the value significantly of Yuan to satisfy the demand.

2.) The Chinese would have lower Yuan reserve than other country, which mean you need to peg it with other currency, which in other words, at this moment USD. (You cannot peg it with gold because you will need more gold than the currency value you currently have, which is impossible to do)

So, basically, either China Depreciate the value of Yuan or growth more dependant on USD, both of which is bad for China.

 

[Verve]

Good to see the start of the return to a new version of Gold Standard ... Americans ditched gold for $ and now $ is being ditched for gold. Full circle.

 

[shadows888]

Another thread about "Petrol-Yuan" lol........

You can all buy oil from Yuan or gold you like, it won't make a dent on US Dollars.

Trading Commodity (such as gold, oil, silver and meat) and so on only ever used up 5% of total USD market, the majority of the USD trade in SWIFT International Transfer (Which is where 86% of all USD goes), the majority of SWIFT customer is Central Bank around the world.

Let's compare the value of Commodity Trade, according to International Trade Center, the whole year of Commodity Trade in US Dollar value is at 7 Trillions Dollars for the whole year in 2012, in that 7 trillions, only 2.1 trillions dollar has gone to Trading ALL Energy Resource (Which is all type of energy resource, include oil, gas, ethanol, propane and battery acid). According to SWIFT and BIC, the US dollar settlement in SWIFT Payment is 5 trillions A DAY in 2015.

Even if all oil from now on is settle using Yuan, the impact to US Dollar is neglectable

sigh, it's the beginning, now instead of just the dollar, others have alternatives. you said it won't make a dent, but it totally will in time.

Actually, that's bad for China.

You can only have a certain amount of Yuan in circulation at a given moment, if you need more (to pay off debt to creditor) then you will depreciate the value of Yuan. Unlike US dollar, Yuan bond is not at all popular and did not have enough push to settle the spike on Yuan Demand. Which mean one of the two things will happen if OPEC drop USD and uses Yuan in the near future.

1.) China need to print more money so to allow other country to trade with Yuan (less than 2 Trillion each year) and hence depreciate the value significantly of Yuan to satisfy the demand.

2.) The Chinese would have lower Yuan reserve than other country, which mean you need to peg it with other currency, which in other words, at this moment USD. (You cannot peg it with gold because you will need more gold than the currency value you currently have, which is impossible to do)

So, basically, either China Depreciate the value of Yuan or growth more dependant on USD, both of which is bad for China.

OPEC isn't going to drop the USD, they are just going to also use Yuan. or mix of both. this give him alternatives... which is the whole point of this.

 

[Beast]

If anybody noticed,USD is starting to drop in value compare to other currency.

China has another big factor to support yuan. That is China being the world factory of commodity. You can used your yuan to trade for Chinese goods. That makes yuan a very attractive currency to keep for countries.

 

[TaiShang]

What is really important is to have alternatives so that nations would not be imprisoned into a single option.

Very much like the AIIB, it is not to destroy US-established regime. It is just to offer viable alternatives.

As long as it does not touch China's interests, China is fine the US police the world using it's most valuable and expendable asset, the mercenarized US military.