There have been a number of news articles about the recently announced plan by China to try and get oil contracts priced in yuan (petro-yuan). CNBC runs this new article that also says China is working hard towards that goal. But this article suggests it may not be easy and may take longer than some would think. Below are a couple of excerpts.
---------------------------------------------------------------------------------------------------------------------"China is looking to make a major move against the dollar's global dominance, and it may come as early as this year.
The new strategy is to enlist the energy markets' help: Beijing may introduce a new way to price oil in coming months — but unlike the contracts based on the U.S. dollar that currently dominate global markets, this benchmark would use China's own currency. If there's widespread adoption, as the Chinese hope, then that will mark a step toward challenging the greenback's status as the world's most powerful currency."
. . . . .
"The plan is to price oil in yuan using a gold-backed futures contract in Shanghai, but the road will be long and arduous."
Please click here to read the full article on CNBC
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Added notes: More China news & China may get a new central bank head soon
Gold backed oil futures contract? Not sure I understand that mechanism completely. Gold is still currently considered a commodity instead of a currency around most of the world. Why back one commodity contract with another commodity if what they really want is to usurp the petrodollar with their own fiat currency?
ReplyDeleteHow to restore trust after a mathematically certain fiat currency hyperinflation?
ReplyDeleteThere is only ONE answer to that question and if you think about it you'll understand that gold isn't and never was a commodity or currency, though it can function as both.
For CBs gold is and always has been a trust and solvency restoration token. That's why gold appears on every major CB's balance sheet as a physical asset. That's why CBankers call it "tradition".
When solvency and trust go gold comes and IS REVALUED!
Gold's greatest quality is, apart from being portable, divisible, discreet, fungible, durable, and acceptable everywhere, that nobody truely needs it!
It's revaluation does not disrupt the market place, because it is not an industrially relevant commodity like silver or copper or oil.
Gold (and with it trust and solvency) can only be revalued, because of its third transcendend function: it is useless for the industry.
And because it is not really needed, it is not used up either. That's why it's been a stable value anchor since the beginning of the first monetary system.
"Gold functions like the sun, with all currencies as planets orbiting around it, with only the sun in fixed position." (Zijstra)
China (SCO) does not want "to usurp the petrodollar with their own fiat currency". The SCO nations want to create a mechanism where every nation can use their own preferred medium of exchange to buy oil. And gold, delinked from these currencies, will then act as a multi-national reserve asset.
In a multipolar world with a several national currencies or a representative basket of currencies functioning as reserve,...the element of -value storage- MUST be included/incorporated!
>>> "When you wrap your mind around the socio-political stickiness of the situation, you quickly realize that the problems of the outmoded dollar-centric (or any national-centric) reserve structure of the international monetary system cannot be solved as easily as a move into another currency -- for example, the euro or renminbi. That merely relocates the socio-political problems to a different geography.
Delete"A shift into a gold-centric reserve structure is the only long-term solution, allowing each nation to pursue (to a modest extent) its own easy- or tight-currency policy without having an immediate effect on the value and stability of other nations' reserves.
"In this process gold will be elevated in value, but the key difference under this architecture is that, unlike any chosen nation-state, Mother Nature will not raise socio-political objections to such high valuation of her 'currency' because she does not have a legion of exporting constituents to pacify.
"If you can understand this, you will be able to divine the future for yourself, and to act -- buy gold -- with utmost confidence, even and especially on price-dipping days like we're currently enjoying." <<<
http://www.gata.org/node/5729
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The world is developing a new monetary system.
It is the result of new thinking about money itself. It began long ago even before Rueff but continued to be flushed out until the makers of the Euro put it into action.
The functions of money will be split. Fiat currencies will persist as the various media of exchange. They will not be hoarded and will therefore not tend to need to be created in excess. The store of value function will be taken by gold. From Central Banks to peasants in India the world can use gold as a way to back currencies and save. If a currency is over printed then the price of gold will rise in that currency. Holders of gold in that currency zone will see their purchasing power preserved.
The structure of the Euro is practically shouting the strategy to the world but not a single monetary thinker (beside Fofoa) has even taken note...not one in the 7.5 years I have been reading on these topics....not ONE.
You'd think that the structure of the Euro and it's 10,800 tons of gold wold at least get mentioned....nope...
I don't think many people understand the plan.
It will not be good for the dollar.