China Is One Signature Away From Dealing The Dollar A Death Blow

Authored by Brandon Smith via Birch Gold Group,

If you leave your sliding glass door open, you might let in a stray cat, raccoon, or bugs without knowing it.

Some intruders are worse than others. All can be annoying. But let in a thief, who robs your home... and it only takes that one time to change your life forever.

The U.S. has essentially left their “sliding glass door” open, and on March 26 China is set to become the intruder that may very well deal a death blow to the dollar.

China Prepares Death Blow to the Dollar

On March 26 China will finally launch a yuan-dominated oil futures contract. Over the last decade there have been a number of “false-starts,” but this time the contract has gotten approval from China’s State Council.

With that approval, the “petroyuan” will become real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention.

This could be a death blow for an already weakening U.S. dollar, and the rise of the yuan as the dominant world currency.

But this isn’t just some slow, news day “fad” that will fizzle in a few days.

A Warning for Investors Since 2015

Back in 2015, the first of a number of strikes against the petrodollar was dealt by China. Gazprom Neft, the third-largest oil producer in Russia, decided to move away from the dollar and towards the yuan and other Asian currencies.

Iran followed suit the same year, using the yuan with a host of other foreign currencies in trade, including Iranian oil.

During the same year China also developed its Silk Road, while the yuan was beginning to establish more dominance in the European markets.

But the U.S. petrodollar still had a fighting chance in 2015 because China’s oil imports were all over the place. Back then, Nick Cunningham of OilPrice.com wrote

Despite accounting for much of the world’s growth in demand in the 21st Century, China’s oil imports have been all over the map in recent months. In April, China imported 7.4 million barrels per day, a record high and enough to make it the world’s largest oil importer. But a month later, imports plummeted to just 5.5 million barrels per day.

That problem has since gone away, signaling China’s rise to oil dominance…

The Slippery Slope to the Petroyuan Begins Here

The petrodollar is backed by Treasuries, so it can help fuel U.S. deficit spending. Take that away, and the U.S. is in trouble.

It looks like that time has come…

A death blow that began in 2015 hit again in 2017 when China became the world’s largest consumer of imported crude

Now that China is the world’s leading consumer of oil, Beijing can exert some real leverage over Saudi Arabia to pay for crude in yuan. It’s suspected that this is what’s motivating Chinese officials to make a full-fledged effort to renegotiate their trade deal.

So fast-forward to now, and the final blow to the petrodollar could happen starting on March 26. We hinted at this possibility back in September 2017

With major oil exporters finally having a viable way to circumvent the petrodollar system, the U.S. 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.

Once the oil markets are upended, the yuan has an opportunity to become the dominant world currency overall. This will further weaken the dollar.

The Petrodollar’s Downfall Could be a Lift for Gold

Amongst all the trouble ahead for the dollar, there are some good news too. The U.S. might have ditched the gold standard in the 1970’s, but with gold making a return to world headlines… we could see a resurgence.

For the first time since our nation abandoned the gold standard decades ago, physical gold is being reintroduced to the global monetary system in a major way. That alone is incredibly good news for gold owners.

A reintroduction of gold to the global economy could result in a notable rise in gold prices. It’s safe to assume exporters are more likely to choose a gold-backed financial instrument over one created out of thin air any day of the week.

Soon after, we could see more and more nations jump on the bandwagon, resulting in a substantial rise in gold prices.

Comments

Pinto Currency BaBaBouy Thu, 03/22/2018 - 23:51 Permalink

It is PetroGold with gold settlement for oil and it will spread everywhere - PetroYuan name is a bit of a distraction.

https://www.youtube.com/watch?v=tv0u-mEK7Gg

 

Russia's been selling oil to China for physical gold for a while now. 

Starting on March 26, anyone can sell oil for gold to China.

"... The Russians are already selling their oil to China against Chinese yuan and then buying gold on the Shanghai Gold Exchange using yuan-denominated gold futures contracts." https://www.lawtodaymag.co/2017/12/the-golden-petro-yuan-and-the-chinese-bride-in-the-arabian-desert/

In reply to by BaBaBouy

JibjeResearch Luc X. Ifer Thu, 03/22/2018 - 23:56 Permalink

Go requires subtle planning and patient, long term strategy. 

Chess has that long term mentality too, but most people choose force combination. 

These are the philosophies behind the US and China perspective today.  So far, China is winning with the BRI, and the US is trying to force combination with financial and gun wars.

When you failed to plan, you planned to fail.

In reply to by Luc X. Ifer

Implied Violins Luc X. Ifer Fri, 03/23/2018 - 00:06 Permalink

The ones who OWN the game *never* get trapped...

The "reserve currency" gambit is a complete fraud, but it's been passed around like a hot potato for at least 600 years:

https://azizonomics.com/2012/01/04/a-history-of-reserve-currencies-in-one-graph/

Looks like it's China's turn to be the king of the hill.  Well...at least until around 2100, when the international banksters go for their next target.  And oh by the way, there have only been (((eight families))) running this currency game since the 1700's:

http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080

And yes, the IMF/BIS is totally on-board with the BRICS and the PetroYuan; it was they who added the Yuan to the SDR basket of currencies just a couple years ago.

Be on the lookout for the "CryptoYuan" - it's coming, and was predicted in the 1988 Economist:

https://endtimeobserver.blogspot.com/2009/09/flashback-1988-economist-magazine-get.html

So, since all previous changes in the reserve currency came about during times of war...ya think we can avoid that this time around?  I'd bet on it, but I doubt I'd be able to collect for some reason...

In reply to by Luc X. Ifer

veritas semper… ghengis86 Thu, 03/22/2018 - 22:54 Permalink

I would agree with you ,if that $1,000,000,000,000, won't be in toilet paper. Used toilet paper. What you do with 1,000,000,000,000 used toilet paper ? You flushed down the drain.

So ,they mean nothing,nada,zilch,zero.

On the other hand ,when you have 35,000 tons of GOLD .... now  we're talking.

Follow the yellow brick road of OBOR : it will show you that OZ ,the wizard behind the Federal Reserve curtain , has no clothes.

In reply to by ghengis86

mkkby veritas semper… Fri, 03/23/2018 - 03:08 Permalink

What a fucking JOKE!  The petro dollar only mattered for a few years after 1945.  Oil was just the starter motor for a new reserve currency.  Now the engine runs on it's own momentum.

Let's try some logic you conspiracy tards.  World trade in dollars is many MANY times the oil trade.  100 million barrels per day X $60 per is only $6 billion.  Just daily foreign exchange is $3 trillion, or 500x larger.

So china's little futures market won't even make a tiny dent. 

The euro, yen and pound have been competing with the dollar for many MANY DECADES and king dollar is showing no signs of ending.

 

In reply to by veritas semper…

loveyajimbo ghengis86 Thu, 03/22/2018 - 23:39 Permalink

The USA has far bigger problems than China does... and the USA no longer has any unencumbered GOLD.  That is why they have refused to do a legit full audit of gold reserves since Ike.  China is basically backing the Yuan with gold... what will the USA do as a response?

Nothing.  They can't.

The collapse of the dollar will bring MUCH higher interest rates (who wants trash?)... and with a $21 Trillion debt ($220 Trillion in unfunded liabilities)... a "normal" rate of 5% means game over.

Default. Depression. Shit-hole country.

In reply to by ghengis86

Justin Case ghengis86 Fri, 03/23/2018 - 00:52 Permalink

Who has the larger problem here?

The country that printed too many paper promises and global banking system is loaded with. When the countries holding the currency in reserve start losing confidence of the Gov't to be able to make good on their debt, banks start selling the currency and moving into hard money. As the mass selling progresses there are less and less buyers of that currency. Trade becomes an issue b/c no country wants to hold a devaluing currency for any length of time. If they accept a devaluing currency they will want a premium which buys them time to get rid of it. As the value starts to accelerate downward, they will ask for payment in some other form or currency that is stable. Gold works. So the central banks will start buying gold with USD. Gold is an asset and exchangeable for any currency.

Murica will start feeling the wrath of inflation and it will ravage the country. All empires end the same way. Broke.

In reply to by ghengis86

The Australian Four Star Fri, 03/23/2018 - 01:40 Permalink

Nice article however it does not address two fundamental Points: the  yuan is backed by gold you can trade in  yuan or gold and how much of the other commodities are dependent on hydro carbons ? Electricity, transport, hydro carbon by product like plastics and so on. It would take a lot of research to establish the real dependence of all commercial activities on hydro carbons, therefore I would say this article is very misleading.

In reply to by Four Star

Pool Shark Bill of Rights Thu, 03/22/2018 - 22:12 Permalink

Doom porn articles like this and pundits have been predicting the ‘Death of the Dollar’ for decades.

While the dollar is only the best looking horse at the glue factory, it’s still the world’s reserve currency with no serious contenders. It is destined to slowly devalue, while other nation’s currencies are more likely to collapse and their governments default.

The US Dollar’s destiny is to go out with a whimper, not a bang (or a single signature from anybody...)

 

Sorry if the truth hurts...

In reply to by Bill of Rights