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China to buy Oil with gold backed Yuan

General discussions of the systemic, societal and civilisational effects of depletion.

Re: China to buy Oil with gold backed Yuan

Unread postby AgentR11 » Sun 10 Sep 2017, 12:24:51

Yoshua wrote:The value of the yuan would be torn between the falling value of oil and the value of gold which is based on psychology. The Chinese currency manipulators would have added more complexity to the yuan.


Complexity makes it harder to control, but also makes it harder for an external actor to control as well. I know they'd LIKE the Yuan to be at true float and freely convertible, but they still have legitimate concerns regarding food and energy security and domestic market price stability. Their economy is much larger than Russia's too, so just yoinking the plug and saying, "today is the last day we buy and sell currency to manipulate value" is just too dangerous for them. Russia survived it because they export both food and energy, and even then it gave them a solid year of really wacky domestic retail price issues.

So, China has to do this trick much, much slower, and much more cautiously. If rice goes from 5 Yuan a kilo to 10 Yuan a kilo (or whatever, to lazy) overnight, some very angry working class Chinese are going to be on the streets; and that's the one thing the PRC can not have.

This is just one more gentle step amongst many that they been up to for the last decade or so. I suspect they hope to reach float and not actually make an announcement, just gradually less and less manipulation till their is none, with the primary banking lever on the economy becoming central bank interest rates.
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Re: China to buy Oil with gold backed Yuan

Unread postby Yoshua » Sun 10 Sep 2017, 13:59:25

I guess we will just have to wait and see how it all works out for the yuan. This is actually very complicated.

The Russian economy seems to have surprised many western economists. A lot of people have been waiting for the Russian economy to implode on sanctions and falling oil prices and on foreign debt. But so far it looks like they have survived going through hell and fire.

The move to make Russia food independent might have had a stabilizing effect when the ruble started to fall with the oil price. Today they have moved from a food importing nation to an food exporting one in record time.
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Re: China to buy Oil with gold backed Yuan

Unread postby Subjectivist » Mon 11 Sep 2017, 05:57:11

Yoshua wrote:I guess we will just have to wait and see how it all works out for the yuan. This is actually very complicated.

The Russian economy seems to have surprised many western economists. A lot of people have been waiting for the Russian economy to implode on sanctions and falling oil prices and on foreign debt. But so far it looks like they have survived going through hell and fire.

The move to make Russia food independent might have had a stabilizing effect when the ruble started to fall with the oil price. Today they have moved from a food importing nation to an food exporting one in record time.


That is a silly statement. Russia/USSR/Russian Empire has always had a large agricultural surplus with the exception of years where government policy and weather jointly created problems. During the 1970's they had a few bad years and imported American grain at a good discount as President Carter wanted to
Promote 'detent' and ten years ago they imported luxury foods from the world market. At niether time were they in risk of mass famine creating real problems.
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Re: China to buy Oil with gold backed Yuan

Unread postby Yoshua » Mon 11 Sep 2017, 06:51:42

The Russian counter sanctions banned food imports from the West, which hit European food exporters. Russian farmers had a problem with competing with European farmers, since European farmers are heavily subsidized.

The ban on western food imports led to an inflation in food prices in Russia. The ban and higher prices led to an increase in Russian food production.
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Re: China to buy Oil with gold backed Yuan

Unread postby baha » Mon 11 Sep 2017, 07:18:26

Why is this so hard to understand? If you can feed yourself, you can pick and chose who you want to do business with. If you buy your food, they have you by the throat. The US and Russia have the advantage with food. This is the weakness in the third world. When TSHTF China will have problems eating yuan...or oil.

But the third world treats people like fodder. If their going to die anyway, why not take out a few first worlders in a world war. :(
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Re: China to buy Oil with gold backed Yuan

Unread postby Cog » Mon 11 Sep 2017, 08:01:06

Yoshua wrote:
To be honest, I don't have clue what I'm talking about.

.



You should have stopped right there.
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Re: China to buy Oil with gold backed Yuan

Unread postby Revi » Mon 11 Sep 2017, 08:08:40

Guess who the largest wheat producer is? It's China. They just eat it all up, so there's none for export. They will be able to buy things with their account surplus. If they have a gold backed Yuan, that will become the reserve currency. I was rooting for SDR, but it looks like they are making a bid for it.
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Re: China to buy Oil with gold backed Yuan

Unread postby Cog » Mon 11 Sep 2017, 08:50:02

There is not enough gold on the planet to back any sort of fiat based currency. This whole thread is stupid and I feel more stupid for even posting in it.
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Re: China to buy Oil with gold backed Yuan

Unread postby AgentR11 » Mon 11 Sep 2017, 09:42:12

Cog wrote:There is not enough gold on the planet to back any sort of fiat based currency. This whole thread is stupid and I feel more stupid for even posting in it.


Sorry its beyond you.

They are not backing it in the traditional sense. Only allowing it to be immediately tradeable for gold on an exchange. The concept is not to fix the yuan to a specific amount of gold, but rather to guarantee that Russia can sell them oil in Yuan, and end up with a correct market valuation of that oil, and then either buy Chinese stuff with that yuan or purchase gold which they also hold in massive quantities.

This is not a "return to the gold standard" type of article.
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Re: China to buy Oil with gold backed Yuan

Unread postby Cog » Mon 11 Sep 2017, 12:17:21

This post was made by AgentR11 who is currently on your ignore list. Display this post.

Not even going to read his post since they are invariably some sort of Pro-Russian or Pro-Chinese clap-trap. Someone tell me, did I guess correctly?
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Re: China to buy Oil with gold backed Yuan

Unread postby Outcast_Searcher » Mon 11 Sep 2017, 13:17:08

AgentR11 wrote:
Cog wrote:There is not enough gold on the planet to back any sort of fiat based currency. This whole thread is stupid and I feel more stupid for even posting in it.


Sorry its beyond you.

They are not backing it in the traditional sense. Only allowing it to be immediately tradeable for gold on an exchange. The concept is not to fix the yuan to a specific amount of gold, but rather to guarantee that Russia can sell them oil in Yuan, and end up with a correct market valuation of that oil, and then either buy Chinese stuff with that yuan or purchase gold which they also hold in massive quantities.

This is not a "return to the gold standard" type of article.

That's right. However, IMO, Cog is right that this whole thread is stupid. The Yuan and the US Dollar trade every day on the FX (foreign exchange) markets.

So, as I keep pointing out various places but it seems to fail to sink in for most, it's a moot point.

If China wants to have more of dollars and less of Yuan, or more of gold and less of dollars, etc. -- the FX and commodity markets let them, and anyone else with good credit and means, hold a portfolio constructed however they want. There are some minor costs to such trades, but they're TINY compared to the risk of highly volatile commodities and (at times, and certainly over the course of decades) currencies.

Having the Yuan accepted as a major currency and be a peer with the dollar is a major POLITICAL goal for China. It helps give them clout and prestige on the world stage.

But if the issue is something like hedging Yuan or gold or oil for trading with Russia -- the mechanism is certainly there to do that, with huge liquidity and size. And has been for quite a few years -- if the goal is economic.

This is why I say the real motivation for making this a big public issue is geopolitics.
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Re: China to buy Oil with gold backed Yuan

Unread postby AgentR11 » Mon 11 Sep 2017, 13:32:23

I don't disagree with you about it not being a "big issue"; its a small series of issues that interests me in particular about China, BRICS, and the silk road projects. As this relates directly to the oil trade in the event SWIFT and western markets become unavailable to China and they are restricted to using their own exchanges for trade, our little website seems a good spot to discuss it.

Its not an "attack" on the dollar. China holds way too many dollars to want it to be anything other than stable.

Also agree that its primary ramifications are geopolitical, but they are non-trivial in that sphere. Energy security and efficiency of its trade can never be trivial for China, they can not take such access for granted.

nb.. Cog... Russia and China are our adversaries, and people like you that underestimate them based upon GDP size are a weakness of ours. Together, they are easily our match, and we should be doing everything possible to split them; instead we act in ways that force them to turn to each other and cooperate. Big surprise, when they do cooperate, they figure out that their interests are compatible and they become trustworthy by default. That is BAD for the US. Stop taking our #1 slot for granted or we'll end up like the UK... a pet of the next generation (China).
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Re: China to buy Oil with gold backed Yuan

Unread postby Yoshua » Mon 11 Sep 2017, 15:17:04

Cog wrote:
Yoshua wrote:
To be honest, I don't have clue what I'm talking about.

.



You should have stopped right there.


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Re: China to buy Oil with gold backed Yuan

Unread postby Yoshua » Wed 13 Sep 2017, 04:48:12

Jim Rickards letter to Trump about the death of the Petrodollar.

IMF will introduce a global reserve currency Jan 1st 2018...and China has already embraced it.

https://dailyreckoning.com/president-tr ... awakening/
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Re: China to buy Oil with gold backed Yuan

Unread postby Outcast_Searcher » Thu 14 Sep 2017, 13:32:07

Yoshua wrote:Jim Rickards letter to Trump about the death of the Petrodollar.

IMF will introduce a global reserve currency Jan 1st 2018...and China has already embraced it.

https://dailyreckoning.com/president-tr ... awakening/


You do know that blog posts by self appointed "financial experts" selling doom prognostications aren't credible news, right?

Hint: If I had a dollar for every one of the bogus predictions such nutjobs have made about the imminent end of the dollar over the past 35 years (as long as I've been paying any attention), I'm sure I'd be a billionaire.
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“It’s A Huge Story”: China Launching “Petroyuan” In Two Mont

Unread postby AdamB » Wed 25 Oct 2017, 09:36:07


As a reminder, nothing lasts forever... The World Bank's former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system. "The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency." The writing is on the wall for dollar hegemony. As Russian President Vladimir Putin said almost two months ago during the BRICs summit in Xiamen, “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.” As Pepe Escobar recently noted, 'to overcome the


China launching petroyuan
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Re: “It’s A Huge Story”: China Launching “Petroyuan” In Two

Unread postby Subjectivist » Wed 25 Oct 2017, 09:41:17

This is what, the fiftieth time someone has claimed dollar death in international petroleum markets? Don’t get me wrong, I am not looking forward to America losing reserve currency status, but after a decade of these predictions I have been forced into wait and see what happens mode.
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Re: “It’s A Huge Story”: China Launching “Petroyuan” In Two

Unread postby Revi » Wed 25 Oct 2017, 10:03:28

It's going to take a while. This is just one shot over the bow. The British used to make Spanish Reales with copper cores to destroy confidence in the Spanish currency. That's why the Chinese would use chop marks to see if it was a real silver coin. It worked, and the torch was passed eventually to the British. It takes a while for a money to stop being used as the reserve currency. We're on the way... It could be 20 years.

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Re: “It’s A Huge Story”: China Launching “Petroyuan” In Two

Unread postby vtsnowedin » Wed 25 Oct 2017, 10:11:20

As long as the US imports millions of barrels of oil a day paid for with dollars and those dollars can buy airplanes ,weapons systems and any other American made products the dollar will do just fine. :)
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Re: “It’s A Huge Story”: China Launching “Petroyuan” In Two

Unread postby Outcast_Searcher » Wed 25 Oct 2017, 11:05:54

A). In the modern world, where reliable, huge, electronic FX markets exist and provide reliable, easily adjustable, currency hedging at scale, I still think this matters little as far as the "value" of the dollar -- or in causing some kind of dollar crisis.

B). As far as a big overall signal that the US global power is being eclipsed by China, and (based on past reserve currency eras) this is a forecast for a gradual decline in relative US power -- sure, I'll buy that. However, anyone who doesn't, for example, notice that China is gaining in economic and military power compared to the US whether this occurs or not is deaf and blind and clueless. (So why are people wound up about this)?

C). But of course, this gives another chance for the fast crash doom crowd to announce .... fast crash doom! Crashing dollar, doom doom doom! Whee!

And yet, one common sense question should give one pause: Which currency should one hold over time in place of the dollar?

Examples:

i). The Chinese -- who have issues with arbitrariness, opaqueness, and a certain lack of concern about working with the international community?

ii). The hapless Europeans -- where the cohesion of the EU is in doubt, and growth rates are meager, and many social problems grow and fester?

iii). Japan, with staggering debt even by major first world country standards, and with demographics against them, to the extent it appears hard to see how their debt is manageable?

iv). Others? I suppose one could buy a global currency basket, or chunks of the world and hedge... Oh wait -- that's what the FX markets are for. (See point "A").

...

I'll predict that as this plays out it is roughly as "important" as the ETP theory. i.e. NOT.
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