Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek Radio: Harry S. Dent Jr. and Bob Hoye, and Chris Waltzek
By: radio.GoldSeek.com

Your Comprehensive Crash Survival Guide
By: Clive Maund

European Threats
By: John Mauldin

Yet Another Trillion-Dollar Unfunded Liability: WHY California Is Burning
By: John Rubino

Gold And Silver Prices Rise As The Markets And Oil Decline
By: Steve St. Angelo

BIS gold swaps fall in November but bank continues secret trading
By: Robert Lambourne

Listen to what gold is telling you
By: Gary Savage

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 2% and 3% on the Week While Stocks Drop Nearly 5%
By: Chris Mullen, Gold Seeker Report

Gold Stocks Acting as They Should During Market Stress
By: Gary Tanashian

Craig Hemke Warns of Fraud in Fractional Reserve Precious Metals Markets…
By: Mike Gleason

 
Search

GoldSeek Web

 
‘This is the single biggest change in capital markets, maybe of all time’ – Union Bank Switzerland


 -- Published: Wednesday, 28 March 2018 | Print  | Disqus 

By Michael J. Kosares, USAGOLD

“China’s launch on Monday of its crude futures exchange will improve the clout of the yuan in financial markets and could threaten the international primacy of the dollar, argues a new report by Hayden Briscoe, APAC head of fixed income at UBS Asset Management. ‘This is the single biggest change in capital markets, maybe of all time,’ Briscoe said in a follow-up telephone interview.” – Kate Duguid, Reuters, 3-26-2018

Let’s just assume for a moment that an oil contract denominated and settled in Chinese yuan for whatever reasons becomes more attractive to oil traders than one denominated and settled in U.S. dollars. To the degree that decision is shared among market participants, demand will lessen for dollars and increase for yuan – strengthening one and weakening the other. Instead of all oil purchases being routed through the dollar, some level of the international oil trade will be routed through the yuan, including among American companies. “This,” says UBS’ Hayden Briscoe, “helps cement the exchange’s viability and challenges the petro-dollar system, in which oil deals are executed in dollars. This would decrease demand for the greenback and boost U.S. inflation.”

At this time, it is impossible to gauge the impact except to say that such a change in oil market dynamics goes far beyond ordinary commerce to the very heart of the monetary and financial system simply because oil is such a huge chunk of the daily international commerce.  That is why Briscoe says it is “the biggest single change in capital markets, maybe of all time.”

In order for the yuan to openly challenge the U.S. dollar, petroyuan volumes will need to be large enough to attract the attention of speculators and investors globally.  OilPrice.com reports that on the first day of trading, a respectable 15.4 million barrels of crude (about $1 billion worth) were traded in the September contract with Glencore, Trafigura and Freepoint Commodities among the first to take positions.  Jeff Brown, president of FGE, an energy consultant, told Reuters that “The government (in Beijing) seems determined to support it, and I hear a number of firms are being asked or pressured to trade on it, which could help.”

One day does not a market make, but it is interesting to note that on March 26th, the yuan appreciated sharply against the U.S. dollar reaching its highest level in 31 months. Gold, it is worth noting, followed it higher along the exact same timeline. Whether or not the petroyuan establishes itself as a tour de force that openly and effectively challenges the petrodollar, its journey is something that warrants our close attention. Needless to say with everything else that is going on in the financial markets these days, the petroyuan is one component that has not been even modestly factored into the equation.

The Reuters article by Kate Duguid, China oil futures launch may threaten primacy of U.S. dollar quoted at the top of this post is an excellent starting pointa must read. Though the word “gold” is never mentioned, it offers one of the most persuasive arguments in favor of acquiring the precious metal to surface in a very long time.

 

Investor note –– If you are new to this page, we invite you to bookmark it and return frequently for news, opinion and analysis on the precious metals markets posted from a variety of sources, but always with the gold and silver investor in mind. Commodity HQ rates it one of the TOP TEN gold blogs on the world wide web.

 


| Digg This Article
 -- Published: Wednesday, 28 March 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.