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Gold-Backed, Yuan-Denominated Oil Futures Could Dethrone US Petrodollar

Gold-Backed, Yuan-Denominated Oil Futures Could Dethrone US Petrodollar

schiffgold.com /  BY SCHIFFGOLD  / SEPTEMBER 11, 2017

A recent move by China could take a big step toward dethroning the US petrodollar.

The Chinese have announced the launch of a gold-backed, yuan-denominated oil futures contract. The move potentially creates a way for oil exporters to circumvent US dollar denominated benchmarks by trading in yuan. The contracts will be priced in yuan, but convertible to gold. An article in the Nikki Asian Review explains the significance of the move.

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 US dollars. China’s move will allow exporters such as Russia and Iran to circumvent US 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 stability of gold is the key to China’s drive to dethrone the petrodollar

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