Venezuela is officially pricing its oil in Chinese Yuan
Please excuse if disjointed. Combined from 3 Soren K. Group writers on the topic.
As if it couldn't get anymore obvious. LATAM and Communist entities like Russia and China have been in unison for years on a goal of lessening dependence on USD for trade. Now in the past month you have seen Mexico consider remonetizing its Libertad, A "gold backed" Yaun / Oil contract, and now, Venezuela is jumping ship. And why shouldn't they?
MOSCOW (Sputnik) – Venezuela began publishing prices for its oil in Chinese yuan in a bid to avoid the US dollar and counter US sanctions, the country’s President Nicolas Maduro said.
“We are already pricing [oil] in Chinese yuan … because of the sanctions which were facilitated by [opposition politician] Julio Borges and which were adopted by [US President] Donald Trump. They have caused great damage … And we are forced to defend ourselves,” Maduro said Friday while aired by the Telesur broadcaster.
Maduro has already said in the past that Venezuela was going to free itself from the “vice of dollar.”
There really is only one way to ensure international trade in times of sanctions or worse, in times of war. That is Gold. This is not a move towards war, but it is a way to combat potential unilateral trade sanctions.
In late August, Trump introduced new sweeping financial sanctions against Venezuela, in particular, forbidding US private companies from acquiring any bonds issued by Venezuelan government or its state-run oil company.
Venezuela has been in turmoil since April, with months of protest and international community repeatedly expressing concern. The popular unrest has been fueled by a deep economic crisis and some government measures, including the vote for the National Constituent Assembly.
And if you are thinking this is bullish for Gold, think again. The Chinese want to use an implicitly gold- backed Yuan as a transition off the Dollar and have been doing trades with Russia in oil with Gold and Yuan for months as reported here. Some Dots:
- January through May 2017- Russia sells oil to China and gets paid Gold using/ testing blockchain for verification. That Gold remains stored in China SGEX $3BB we are told went through in May (source)
- The IMF abhors putting Gold in an SDR. Remember, a nSDR is not even an actual basket of FIAt currencies. It is a note, an IOU to get those monies. An IOU on international IOUs. Yet it is not unhappy that China has accumulated Gold as part of its diversification from the USD it is tied to. And that is part of why the Yuan is now part of the basket.
- As more oil is priced in Yuan and the pricing mechanisms for Gold and Yuan move eastward we believe a point will be reached where China will start to come off its pseudo Gold standard and debase its own currency back to FIAT via GDP justification.
- China has been cutting USD for oil deals with African countries for years with the kicker we'd bet, of getting those countries to vote alongside China at the UN.
The Golden Yuan is going to Eclipse the USD and lure the countries in desperate need to get off the USD standard by showing those countries, long gold themselves, that the Yuan is "safer" . And then once the Yuan or some SDR with a larger portion of it Yuan based is the currency of choice for oil, we will see the Yuan become less Golden and more FIAT. But that is years from now. Right now EVERYONE wants the price of Gold kept in check. The chinese who need to accumulate more. The US which doesn't want it recognized as the USD dead canary, the IMF which has too much at stake in FIAT as well as Europe for obvious reasons.
And any country not on the YUAN for trade will incur US exported pain. They will be captive US trade partners and impoverished like the "little people" will also be here.
Gold will never get to where it is supposed to be until it is too late or the common man has been forced to sell every ounce. And crypto currencies are the next thing to be co-opted by the governments. Watch. We've already made that call months if not over a year ago.
Previous posts on this:
On one side,you have the Socialist state (represented directly in China and Russia ) and the Corporate western state (represented by cash vending machine politicians and their corporate users).
The other side are the people who bear the burden of tariffs, inflation, taxes, sanctions and other "father knows best" bs we swallow daily on the left and right. Winners: Glencore, China, Russia, Saudis.Losers: citizens of every country, including the US.
A closely-held Chinese oil company agreed to buy a minority stake in Rosneft PJSC for about $9 billion, deepening energy and political ties with Russia amid increasing tensions with the U.S.The deal sees Glencore Plc and Qatar’s sovereign wealth fund selling most of their holding in Russia’s biggest crude producer, which they acquired to much fanfare in December. The commodities giant run by Ivan Glasenberg is making way for CEFC China Energy Co. -- little known even within the energy industry -- while retaining its prized access to millions of barrels of Russian oil exports.
Endgame- Arabs get to sell oil locally to China and Russia. avoid shale oil competition in U.S. This is underpinned by Yuan and Rubble implicit backing by Gold, increasing mistrust of US, especially since Saudi's don't need our weapons any more.
It is the stated intent and has been the policy shift for the 3 nations in the headline to begin escalating their oil deals in Yuan based exchanges. This is the beginning of the end of the Petrodollar. As they cut more deals to end the USD dominance as a currency reserve, their words will increasingly publicly contradict those actions.
Why Will China Succeed?
The key to who is in charge is simple. Exchanges are a proxy for economic success of a geographic region. Exchanges thrive in countries of demand for a commodity, not supply. This is because generally, countries that must export their commodities are poorer. Countries where demand originates dictate terms more so as a result. Now you have the exchanges in Asia, the demand for oil is in asia, and much of the oil supply is close to asia.
And unless the US economy starts making instead of consuming, it will increasingly become a net oil exporter to pay its own debt. And what currency will we be getting paid in? Yuan that is going to be debased.
China has a skillset of copying other countries successes. Their shortcomings are related and a good reason to worry about their inability to stabilize the Yuan offshore while stopping the currency flight for now. This piece will resolve itself more after their November elections. More on that later.
We are now seeing a situation where state controlled centralized entities are more quick to adjust and adapt to changing global circumstances. That is effective fascism. Corporate means of production controlled by the state. Their banks must do as they say. Russia's Gold production is also state controlled. They move in unison while our government leaders are operated like coinslot vending machines dispensing for whoever puts the most money in them.
The US is a state controlled by corporations. And those corporations are not nationalistically loyal to the USA. They are loyal to profits. This is the flipside of competition. In Europe cell phone unified systems protocol made for better product. In the US, we are just getting on one system. Betamax anyone? Better doesn't win all the time in capitalist systems rife with side deals and carve outs.
Trumps policy changes are too late. He is building a wall, both economically, and literally if he can around the US and isolating us from the world in the wrong way. Citizens will not be able to get free market pricing, inflation will be our own problem and not as able to export. The US isnt dying. But if it doesn't get its shit together it will be faced with fewer choices, like making more war to destabilize new relationships while we still have the might, if we have the might.
We suspect Bon Scott will have a rant on this for posting this evening
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