The Chinese are preparing to launch an oil futures contract denominated in yuan and redeemable in gold. That is very bad news for the petro-dollar and U.S. hegemony in the oil trade. The ability to sell oil on Chinese exchanges for yuan will take the potency out of U.S. sanctions levied on nations such as Russia and Iran.
Gold Backing
The gold backing of those contracts figures to lure participants from around the globe – even those with strong ties to the U.S. This additional enticement will go a long way toward allaying the concerns of those who may see the dollar as superior to the yuan in trade.
The move is another sign of the Chinese commitment to ending the dollar’s reign as the world reserve currency.
The oil contract, to be traded on the Shanghai International Energy Exchange, will be China’s first futures contract that is open to international firms for trading. There is no official word on when the contract will launch, but testing has been underway since July.
About the Author:
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.
