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Petro Yuan


gary17
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I noticed China has started to buy oil with Yuan — any economists here have any thoughts as to what this means to the US / dollar / world economy ? I know this is a super broad topic.  I read something on BNN that this is supposed to be good for gold price !

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I noticed China has started to buy oil with Yuan — any economists here have any thoughts as to what this means to the US / dollar / world economy ? I know this is a super broad topic.  I read something on BNN that this is supposed to be good for gold price !

 

Why is this good for Gold?

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There's a case to be made that the US is structurally overvalued due to its use as the world's reserve/trading currency. To the extent that other currencies win a bigger share of global trade, demand for the dollar will be lower (you won't have to own dollars before you, for example, buy oil). More significantly, if you can trade in other currencies you can risk holding some of your reserves in other currencies - so the Chinese could sell treasuries. All of that pushes demand for the dollar down and, all else equal, the gold price (in dollars) would then rise.

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Relevant link about the new kid in town, the Chinese yuan:

http://www.businessinsider.com/dollar-remains-top-reserve-currency-as-central-banks-shun-yuan-2018-1

 

"The Chinese yuan, which some folks thought would pull the rug out from under the dollar, is barely visible in the mix. And folks eagerly waiting for the "death of the dollar," the "end of the dollar hegemony," and similar mayhem will need to be patient."

 

Reasonable to question if the accompanying photo is appropriate but it may say something about the Power of the Dollar.

 

 

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Strengthens the Yuan/USD FX rate by reducing Asian demand for USD, & significant as quite a few other 'Asian' nations may prefer to pay with Yuan as well. It also strengthens the broader case for payment in regional currencies (Euro), and ultimately the development of a boad cryptocurrency specifically for trade settlement in the global oil market.

 

Yes everybody laughed because the use of cryptocurrency was a SA idea, but the fact is that it's a very good one.

If you're tired of US bullying, develop the cryptocurrency outside of the US (China ?) & use it to start reducing the global demand for USD (& its influence over you).

 

SD

 

 

 

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