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Big Problem: China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold

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posted on Sep, 2 2017 @ 09:55 PM
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Now this is huge.... If successful, the fiat Petrodollar is in trouble, really really bad trouble. The whammy of using gold to back it almost ensures success this time. Success for them means big trouble for the US Dollar.

asia.nikkei.com...



China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.

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.

The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. "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," Macleod said.


www.zerohedge.com...




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.



For those that don't know what I am talking about and how bad this can impact the dollar, see here:

www.investopedia.com...



After the collapse of the Bretton Woods gold standard in the early 1970s, the U.S. struck a deal with Saudi Arabia to standardize oil prices in dollar terms. Through this deal, the petrodollar system was born, along with a paradigm shift away from pegged exchanged rates and gold-backed currencies to non-backed, floating rate regimes.

The petrodollar system elevated the U.S. dollar to the world's reserve currency and through this status, the U.S. is able to enjoy persistent trade deficits, and become a global economic hegemony. The petrodollar system also provides the United States’ financial markets with a source of liquidity and foreign capital inflows through petrodollar "recycling."



edit on 2-9-2017 by infolurker because: (no reason given)




posted on Sep, 2 2017 @ 10:02 PM
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That would be a lot of gold. It would still be some form of fractional system I would make an uneducated guess.

I wonder if this--or something like this--is where all the gold has been going?



posted on Sep, 2 2017 @ 10:11 PM
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BRICS? Putin is at this meeting from Sept 3-5.

Why the BRICS meeting is significant for India & China against the backdrop of Doklam issue~title of article

Read more at:
economictimes.indiatimes.com...

Uh oh..😞
edit on 2-9-2017 by Bigburgh because: (no reason given)



posted on Sep, 2 2017 @ 10:12 PM
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And how many times have we heard this sort of bull from a variety of countries over the years ?
Or is this one a go China and bring down that nasty US thread ?
That has been done many times as well...
Done
Next



posted on Sep, 2 2017 @ 10:13 PM
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It's a good thing we elected a business man...Trump will know what to do!!!





posted on Sep, 2 2017 @ 10:14 PM
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Another reason to favor XRP.



posted on Sep, 2 2017 @ 10:15 PM
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a reply to: infolurker

Well we know how we like to spread "freedom" to folk who switch to gold.

It's gonna be a long decade...



posted on Sep, 2 2017 @ 10:19 PM
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originally posted by: Abysha
a reply to: infolurker

Well we know how we like to spread "freedom" to folk who switch to gold.

It's gonna be a long decade...


I was thinking the same thing.

Also, if the Saudi's take the leap into Yuan pricing instead of US Dollars, we are in a world of hurt.
edit on 2-9-2017 by infolurker because: (no reason given)



posted on Sep, 2 2017 @ 10:21 PM
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I wonder what the metals market will do. The gold bugs may have been on to something.

Nothing yet....


www.bloomberg.com...

edit on 2-9-2017 by olaru12 because: (no reason given)



posted on Sep, 2 2017 @ 10:25 PM
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a reply to: olaru12

Gold recently broke the 1300 mark and last time I checked it was 1320.



posted on Sep, 2 2017 @ 10:27 PM
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Why back oil with gold...
That is like backing silver with titanium.

It's redundant and belies an inherent disconnect from basic [political] economics...

We still control more than 10% of their import directly and more through our Allies, especially Asian forces like South Korea...

China is in no position to flex muscle in the crude world of oil - pun intended
Both North and South America, Alaska, and particularly the Texas steppe sit atop vast repositories of oil unimaginable in scale since technology has evolved...fracking, etc...

China, like imperial Japan, will always be at the mercy of their neighbors because, in the end, we all could turn the spigot off and render them a toothless lion..

Though China does not belong in a comparison with the Mighty Japanese, their natural resources regarding oil are an unavoidable parallel to ignore..

-Chris
edit on 2-9-2017 by Christosterone because: (no reason given)



posted on Sep, 2 2017 @ 10:28 PM
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a reply to: toysforadults

What's XRP?



posted on Sep, 2 2017 @ 10:29 PM
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originally posted by: toysforadults
a reply to: olaru12

Gold recently broke the 1300 mark and last time I checked it was 1320.



Lead might be the hot property now if Abysha is correct.



posted on Sep, 2 2017 @ 10:30 PM
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originally posted by: Bigburgh
a reply to: toysforadults

What's XRP?


Google XRP/Ripple. You will be glad you did in a year or two.



posted on Sep, 2 2017 @ 10:35 PM
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a reply to: toysforadults

Ohhhhh..

Oddly enough google won't do the search on Cryptocurrency. My Verizon cable wont let me google.... but Verizon gave me a search.


Edit: see what I mean🙄

edit on 2-9-2017 by Bigburgh because: (no reason given)



posted on Sep, 2 2017 @ 10:39 PM
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originally posted by: Bigburgh
BRICS? Putin is at this meeting from Sept 3-5.

Why the BRICS meeting is significant for India & China against the backdrop of Doklam issue~title of article

Read more at:
economictimes.indiatimes.com...

Uh oh..😞


Good link. When people ask why Russia is our enemy, this is why:


All BRICS countries oppose Western economic sanctions, restrictions on international trade and migration of skilled personnel that would deprive them of export markets and revenues. At the Xiamen summit, they will be taking aim at protectionist policies and values being instituted by US President Donald Trump and his European counterparts. BRICS aspires to declare the dawn of a new era where the baton for upholding liberal principles has passed from a fractious West to a resurgent East which is now making rules for global governance.



posted on Sep, 2 2017 @ 10:39 PM
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a reply to: Bigburgh

The great thing is they represent a real free market. Anyone who understands why free markets really work is going to understand why these things are going to continue to explode in value.



posted on Sep, 2 2017 @ 10:56 PM
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a reply to: toysforadults

I never understood how crypo currency is backed. A good friend started looking into it about 2 years ago. She seemed to get a good grasp of it. Time to start buying.



posted on Sep, 2 2017 @ 10:57 PM
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a reply to: PistolPete

Thanks, I don't see it going away.



posted on Sep, 2 2017 @ 11:06 PM
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originally posted by: Abysha
a reply to: infolurker

Well we know how we like to spread "freedom" to folk who switch to gold.

It's gonna be a long decade...


How much do you hate America?

Good grief.




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