Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

The Petroyuan Is For Real

  by    0   0

Late last month, China finally launched its much anticipated yuan-denominated oil futures contract. Many analysts think this is yet another sign that the mighty dollar’s world dominance is coming to an end.

The yuan-based oil contracts were a long time coming with several announcements and false starts over the last 10 years. The launch was reportedly a success with well over 23,000 contracts traded within the first hour for a notional trading volume of over 10 billion yuan.

As ZeroHedge put it, “the ‘petroyuan’ is now real and China will set out to challenge the ‘petrodollar’ for dominance.”

Many question the viability of yuan-denominated oil contracts because of the currency’s volatility. Last fall, the Chinese announced the launch of a gold-backed, yuan-denominated oil futures contract.  These contracts would be priced in yuan, but convertible to gold.

But if early trading serves as any indication, the Chinese may not even have to go to the gold-backed contracts. As the world’s leading importer of oil, it has significant clout in the market. As ZeroHedge reported, “Beijing can exert some real leverage over Saudi Arabia to pay for crude in yuan.”

That’s not good news for the dollar.

With major oil exporters finally having a viable way to circumvent the petrodollar system, the US economy could soon encounter severely troubled waters. First of all, the dollar’s value depends massively on its use as an oil trade vehicle. When that goes away, we will likely see a strong and steady decline in the dollar’s value.”

Or as an article at the Gold Telegraph starkly put it, “the rise of the petroyuan could be the death blow for the dollar.”

China, Russia and even Turkey have been working to free themselves from dependence on the dollar. But if the dollar is eventually toppled from its throne, it won’t likely happen in a sudden coup. More likely, its power will simply erode and it will eventually become irrelevant on the world stage.

The concern is the dollar’s value will wilt on the world stage. Its value has already declined significantly at home, as the Gold Telegraph pointed out.

The dollar has decreased 30% in purchasing power since 2000. It has lost 96% of its value since 1913. On an average, the US is devalued by 50% every generation.

Enter gold.

It’s no coincidence that countries like China, Russia and Turkey – countries seeking to untangle themselves from the dollar – have been the ones buying gold. Gold provides stability, whether for oil contracts or currencies in general. The yellow metal is a key to economic independence for countries looking to minimize the risk posed by the US fiat currency and to shake off the influence of foreign governments. As the Gold Telegraph put it, “In bettor’s terms, gold is the last ace in the hole for global currency stability.”

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Fed Set to Buy Risky Small Business Loans from Banks

The Federal Reserve keeps coming up with new and creative ways to get more people deeper into debt while simultaneously shielding banks from any risk.

READ MORE →

The Great Government Gold Heist of 1933

Yesterday marked the anniversary of the great government gold heist of 1933 ordered by President Franklin D. Roosevelt. On April 5, 1933, the president signed Executive Order 6102. It was touted as a measure to stop gold hoarding, but it was in reality, a massive gold confiscation scheme. The order required private citizens, partnerships, associations […]

READ MORE →

What About Silver?

There’s been a lot of focus on gold with the crashing stock market and economic chaos set off by the coronavirus economic lockdown. But what about silver? There were reasons to be bullish on silver even before the bottom fell out of the stock market. In its 2020 Market Forecast, the Silver Institute projected that […]

READ MORE →

Fed Launches International Repo Facility

In yet another unprecedented attempt to keep the air in the financial bubbles, the Federal Reserve announced the establishment of an international repo facility. The repo facility will allow foreign central banks and other international monetary authorities to enter into repurchase agreements with the Federal Reserve. According to the Fed announcement, FIMA account holders can […]

READ MORE →

Stimulus Bill Throws Veil of Secrecy Over the Federal Reserve

Last week, Congress passed a $2 trillion stimulus bill in an effort to offset the economic impacts of the coronavirus. Most people have focused on the $1,200 checks to Americans and bailouts for industries hard-hit by the economic shutdown. But the 883-page bill does a lot more than that, including empowering the Federal Reserve to […]

READ MORE →

Comments are closed.

Call Now