A sharp-eyed FReeper noted the USA and U.K. flags are not in that group. The darn colonialism.
Posted on 09/05/2017 7:37:59 PM PDT by bkopto
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 rules of the global oil game may begin to change enormously," said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT.
The Shanghai International Energy Exchange has started to train potential users and is carrying out systems tests following substantial preparations in June and July. This will be China's first commodities futures contract open to foreign companies such as investment funds, trading houses and petroleum companies.
Most of China's crude imports, which averaged around 7.6 million barrels a day in 2016, are bought on long-term contracts between China's major oil companies and foreign national oil companies. Deals also take place between Chinese majors and independent Chinese refiners, and between foreign oil majors and global trading companies.
Alan Bannister, Asia director of S&P Global Platts, an energy information provider, said that the active involvement of Chinese independent refiners over the last few years "has created a more diverse marketplace of participants domestically in China, creating an environment in which a crude futures contract is more likely to succeed."
China has long wanted to reduce the dominance of the U.S. dollar in the commodities markets. Yuan-denominated gold futures have been traded on the Shanghai Gold Exchange since April 2016, and the exchange is planning to launch the product in Budapest later this year.
Yuan-denominated gold contracts were also launched in Hong Kong in July -- after two unsuccessful earlier attempts -- as China seeks to internationalize its currency. The contracts have been moderately successful.
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.
Yuan-denominated gold contracts have significant implications, especially for countries like Russia and Iran, Qatar and Venezuela, said Louis-Vincent Gave, chief executive of Gavekal Research, a Hong Kong-based financial research company.
These countries would be less vulnerable to Washington's use of the dollar as a "soft weapon," if they should fall foul of U.S. foreign policy, he said. "By creating a gold contract settled in renminbi [an alternative name for the yuan], Russia may now sell oil to China for renminbi, then take whatever excess currency it earns to buy gold in Hong Kong. As a result, Russia does not have to buy Chinese assets or switch the proceeds into dollars," said Gave.
Grant Williams, an adviser to Vulpes Investment Management, a Singapore-based hedge fund sponsor, said he expects most oil producers to be happy to exchange their oil reserves for gold. "It's a transfer of holding their assets in black liquid to yellow metal. It's a strategic move swapping oil for gold, rather than for U.S. Treasuries, which can be printed out of thin air," he said.
Market share
China has been indicating to producers that those happy to sell to them in yuan will benefit from more business. Producers that will not sell to China in yuan will lose market share.
Saudi Arabia, a U.S. ally, is a case in point. China proposed pricing oil in yuan to Saudi Arabia in late July, according to Chinese media. It is unclear if Saudi Arabia will yield to its biggest customer, but Beijing has been reducing Saudi Arabia's share of its total imports, which fell from 25% in 2008 to 15% in 2016.
Chinese oil imports rose 13.8% year-on-year during the first half of 2017, but supplies from Saudi Arabia inched up just 1% year-on-year. Over the same timeframe, Russian oil shipments jumped 11%, making Russia China's top supplier. Angola, which made the yuan its second legal currency in 2015, leapfrogged Saudi Arabia into second spot with an increase of 22% in oil exports to China in the same period.
If Saudi Arabia accepts yuan settlement for oil, Gave said, "this would go down like a lead balloon in Washington, where the U.S. Treasury would see this as a threat to the dollar's hegemony... and it is unlikely the U.S. would continue to approve modern weapon sales to Saudi and the embedded protection of the House of Saud [the kingdom's ruling family] that comes with them."
The alternative for Saudi Arabia is equally unappetizing. "Getting boxed out of the Chinese market will increasingly mean having to dump excess oil inventories on the global stage, thereby ensuring a sustained low price for oil," said Gave.
But the kingdom is finding other ways to get in with China. On Aug. 24, Saudi Vice Minister of Economy and Planning Mohammed al-Tuwaijri, told a conference in Jeddah that the government was looking at the possibility of issuing a yuan-denominated bond. Saudi Arabia and China have also agreed to establish a $20 billion joint investment fund.
Furthermore, the two countries could cement their relationship if China were to take a cornerstone investment in the planned initial public offering of a 5% state in Saudi Aramco, Saudi Arabia's national oil company. The IPO is expected to be the largest ever, although details on the listing venue and valuation are yet scant.
If China were to buy into Saudi Aramco the pricing of Saudi oil could shift from U.S. dollars to yuan, said Macleod. Crucially, "if China can tie in Aramco, with Russia, Iran et al, she will have a degree of influence over nearly 40% of global production, and will be able to progress her desire to exclude dollars for yuan," he said.
"What is interesting is that China's leadership originally planned to clean up the markets next year, but brought it forward to this year. One interpretation of that change is that they have brought forward the day when they pay for oil in yuan," said Simon Hunt, a strategic adviser to international investors on the Chinese economy and geopolitics.
China is also making efforts to set other commodity benchmarks, such as gas and copper, as Beijing seeks to transform the yuan into the natural trading currency for Asia and emerging markets.
Yuan oil futures are expected to attract interest from investors and funds, while state-backed oil majors, such as PetroChina and China Petroleum & Chemical (Sinopec) will provide liquidity to ensure trade. Locally registered entities of JPMorgan, a U.S. bank, and UBS, a Swiss bank, are among the first to have gained approval to trade the contract. But it is understood that the market will be also open to retail investors.
China ties their own currency to a basket which is mostly valued by the dollar. All they have to do is let their currency free and oil would be cheap to them.
Dollar slides inflation hits home bigtime.
Would that be a bug or a feature?
So, bringing in a gold standard?
I wonder how much the average Wal-Mart basket of good would cost, you know..?
Chicoms are feeling the Trump squeeze
This could shape up to be pretty wild. You can bet the Central Bankers are already in on it and planning their moves to come out whole as they unwind over $20 Trillion Dollars of Inflation. There are 2 ways out of the mess created by Central Bankers and Fiat Currency, Complete Collapse or War, usually both.
Pretty wild is putting it mildly. I guess China thinks she is finally big enough to stand up to the US and one way or another she is going to find out very soon because there is no way the US can let this stand.
Re: Your posted cartoon.
No sh#t! Exactly!
It would be a bug if you are an American, especially if you are on a fixed income.
It would be a feature if you want to see the .fedgov cut down in size.
It would be a feature if you are invested in gold or, possibly, cryptocurrencies.
Fracking Bitchez! You can steal technology from the American Government via lobbyists and politicians, however, private sector is tough.
The Chinese must be at least 5 years away from fracking technology and they know they need to stop the US from totally indulging in this oil tech boom.
Ny State is holding up fracking right now because Cuomonand his son Fredo have a lock on politics and media in Ny.
The Chinese must act now before the US truly explodes and becomes the Saudi’s of the West.
Game on.
Sigh. Just more BS.
Also, Trump is making a move to have the dollar backed by gold (aka not a fiat currency). If the uniparty does not knock Trump out of office or get Trump killed (attempts have occurred and failed, if successful Civ War II follows), this will happen before the end of his first term.
Recent history has proven that even half of the United States will latch on to any NWO goon (well, except Jeb Bush) as long as he espouses ridiculous liberal, Marxist, Communist ideas in a pleasant speaking voice. Add in some cultural garbage to sweeten the mix, and you have a world ripe for the Antichrist.
Even though I know it’s coming, I’m frankly shocked by how many remain stuck on stupid in our country with this stuff. Of course, their only lifeline to “news” is the MSM and many have no idea what they’re missing.
I am reminded of “cares of this life/world” etc. uttered by Christ Himself.
Mark 4:19 King James Version
19 And the cares of this world, and the deceitfulness of riches, and the lusts of other things entering in, choke the word, and it becometh unfruitful.
Luke 21:34-36 King James Version
34 And take heed to yourselves, lest at any time your hearts be overcharged with surfeiting, and drunkenness, and cares of this life, and so that day come upon you unawares.
35 For as a snare shall it come on all them that dwell on the face of the whole earth.
36 Watch ye therefore, and pray always, that ye may be accounted worthy to escape all these things that shall come to pass, and to stand before the Son of man.
gold ping!
Our oil production is already greater than the Saudis but we use it internally. As long as oil stays around 50 bucks or above we will continue to produce more and more oil. Our coal and natural gas reserves are astronomical. "Bring it on China!"
Gold is currently $1340/oz, so that's 72910 pz per supertanker at current prices.
72910 oz is a bit more than 182 of those big 400-oz bars you see in the pictures of the national gold reserves.
A little close examination reveals that the gold bars in that image (of the gold vault at the Bank of England) reveals that the bars are stacked in groups of 36, four high by nine wide. Thus, each shelf in the foreground contains about 72 bars, and the value of one supertanker full of oil at todays prices is a bit more than the gold on two shelves. Each rack of bars could pay for about one and one-half supertankers.
I read once (long ago) that a chains of supertankers stretch between the middle east and their major markets; the chains are in motion 24-7, with the ships spaced at intervals of about 75 miles. By my reckoning, this means that each rack of bars in this pictures pays for about 120 miles worth of supertankers; when you consider that the route between the mid-east and their Asian markets is about 4500 miles, you can see that about 38 of those racks worth of gold is in motion between the mid-East and Asia at any one time.
Then add to that the oil in motion along the other major routes, and you can see that all the gold in that room would just about pay for all the oil in motion at any one moment in time.
That's if all those shelves are full to capacity, which they obviously are not.
So tell me; Is the Us Gold Standard the greatest lie ever told by the Fed perhaps knowing the real US Gold is tech/fracking and reserves?
I like to think Exxon knew 40 years ago fracking was the answer while Obama was spouting peak oil?
Greatest game changer ever in the history of the world next to the wheel shifting oil away from the Middle East and denying Environmental freaks/Marxists redistribution of American wealth.
Praying
This will only spur our resolve to stop trading with China. We are their #1 customer. Without our money, their economy tanks overnight and their crippling debt gets called in.
As usual, China is trying to project their large face to the world during BRICS.
Trump will introduce some reality to them next week.
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