China Uses Yuan, Gold To Pay For Some Iran Crude

"“China is using its currency, the yuan, and gold to pay for some of its imports of Iranian crude oil, according to Iran trade professionals.

The news underscores how the Islamic Republic is able to alleviate the effect of mounting sanctions, which in turn could ease global oil supply concerns and push oil prices further down.

One Iran trade professional said last week that Chinese oil companies have for many months been using the yuan to pay for some Iranian oil, after many banks refused to handle payments in dollars.

"In return, Iran is using the currency to pay for infrastructure such as roads," the person told Dow Jones Newswires.

According to a person in the shipping industry, China now represents one-third of Iran's oil sales.

European refiners have cut purchases of the Islamic Republic's crude ahead of a planned embargo coming into force this summer; Asian buyers have also reduced imports to avoid being banned from the U.S. financial system.

Iran is also using a local currency, the rupee, to sell some of its crude to India. However, such a payment mechanism tends to be unfavorable for Iran, locking Tehran into captive trade relations with its oil buyers. In addition, there is only so much the Islamic Republic can buy in goods from China and India.

So in addition to the yuan, Iran has also agreed to be paid in gold for some of its oil, the trade professionals say. In one recent case, two Iranian oil tankers heading for China were bartered at sea with their equivalent in the precious metal, one Iran trade professional said…”

at http://ausbullion.blogspot.com/2012/05/china-uses-yuan-gold-to-pay-for-some.html

Leeb - We Will Now See a Gold Standard Imposed in Europe

"With stocks trading lower, along with gold and silver, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management.  Leeb told KWN we will see a gold standard imposed on Europe.  Leeb also said the Chinese will move to back the yuan with gold.  Here is what Leeb had to say about the situation:  “Gold is reacting to what’s going on in Europe.  It’s the last resort of liquidity for a lot of people.  It’s been the best performing major asset over the last 12 years.  You have a lot of chaos in Europe an no one knows what’s happening, so there has been a lot of reflex selling of gold.”

Stephen Leeb continues:

“Gold has been a bit stronger than I thought it would be considering the danger of a euro breakup is accelerating.  I don’t think there’s any chance the euro holds together under its current form.  Unemployment among the young in Greece is about 50%.  That can’t stand, it just can’t.

These politicians can’t do this forever.  People are not going to tolerate starvation.  Sooner or later the politicians are going to have to respond.  This means less austerity and more growth, and the end of German hegemony in Europe.

This looks similar to the end of World War I.  Once the euro goes, it will be very much like the end of the war.... 

“You are going to have a lot of currency devaluation.  You are also going to see massive inflation.  Everybody knows what that means for gold.

So you are in the last hours of turbulence for the gold market (to the downside).  Once this correction ends, you are going to have a barnburner to the upside.  Gold will just vault.  I don’t think investors will even remember these frustrating days.  I had been warning we could see this drop in gold because of the problems in Europe, but investors should take advantage of it.

Look at what China is doing.  China is buying gold hand over fist right now.  They are going to move the yuan forward as the world’s reserve currency and it’s going to be partially backed by gold.  The world can also expect to see a gold standard imposed on Europe in the next 12 to 18 months..."

at   http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/9_Leeb_-_We_Will_Now_See_a_Gold_Standard_Imposed_in_Europe.html

Embry - What’s Happening in China is Wildly Bullish for Gold

"The Chinese, over the weekend, stated their intention they wanted to make the yuan a much more internationally traded currency. Up to now it’s been so restricted that you couldn’t really deal in it. If this is their intent, and I believe it is, this is a huge step.

This is spectacularly bullish for gold because I think the Chinese will ultimately want to back their money with gold. The Chinese are huge players in the gold market. That’s their agenda, to be seen as a major play in the international currency market.

What the US dollar doesn’t need these days is serious competition in terms of being the reserve currency. If the US dollar starts to move off center stage as time goes on, this will be wildly bullish for gold. One of the things that would destabilize the whole financial system is if people figured out how vulnerable the US dollar is.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/16_Embry_-_Whats_Happening_in_China_is_Wildly_Bullish_for_Gold.html

10 Reasons Why The Reign Of The Dollar As The World Reserve Currency Is About To Come To An End

"The U.S. dollar has probably been the closest thing to a true global currency that the world has ever seen. For decades, the use of the U.S. dollar has been absolutely dominant in international trade. This has had tremendous benefits for the U.S. financial system and for U.S. consumers, and it has given the U.S. government tremendous power and influence around the globe. Today, more than 60 percent of all foreign currency reserves in the world are in U.S. dollars. But there are big changes on the horizon. The mainstream media in the United States has been strangely silent about this, but some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade. There are also some oil producing nations which have begun selling oil in currencies other than the U.S. dollar, which is a major threat to the petrodollar system which has been in place for nearly four decades. And big international institutions such as the UN and the IMF have even been issuing official reports about the need to move away form the U.S. dollar and toward a new global reserve currency. So the reign of the U.S. dollar as the world reserve currency is definitely being threatened, and the coming shift in international trade is going to have massive implications for the U.S. economy.
A lot of this is being fueled by China. China has the second largest economy on the face of the earth, and the size of the Chinese economy is projected to pass the size of the U.S. economy by 2016. In fact, one economist is even projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

So China is sitting there and wondering why the U.S. dollar should continue to be so preeminent if the Chinese economy is about to become the number one economy on the planet.

Over the past few years, China and other emerging powers such as Russia have been been quietly making agreements to move away from the U.S. dollar in international trade. The supremacy of the U.S. dollar is not nearly as solid as most Americans believe that it is.

As the U.S. economy continues to fade, it is going to be really hard to argue that the U.S. dollar should continue to function as the primary reserve currency of the world. Things are rapidly changing, and most Americans have no idea where these trends are taking us.

The following are 10 reasons why the reign of the dollar as the world reserve currency is about to come to an end...."

at http://theeconomiccollapseblog.com/archives/10-reasons-why-the-reign-of-the-dollar-as-the-world-reserve-currency-is-about-to-come-to-an-end

Brics’ move to unseat US dollar as trade currency

"South Africa will this week take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.

Thus, the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.

This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.

The move is set to challenge the supremacy of the US dollar..."

at http://www.citypress.co.za/Business/News/Brics-move-to-unseat-US-dollar-as-trade-currency-20120324

Saudi Arabia And China Team Up To Build A Gigantic New Oil Refinery - Is This The Beginning Of The End For The Petrodollar?

"The largest oil exporter in the Middle East has teamed up with the second largest consumer of oil in the world (China) to build a gigantic new oil refinery and the mainstream media in the United States has barely even noticed it. This mammoth new refinery is scheduled to be fully operational in the Red Sea port city of Yanbu by 2014. Over the past several years, China has sought to aggressively expand trade with Saudi Arabia, and China now actually imports more oil from Saudi Arabia than the United States does. In February, China imported 1.39 million barrels of oil per day from Saudi Arabia. That was 39 percent higher than last February. So why is this important? Well, back in 1973 the United States and Saudi Arabia agreed that all oil sold by Saudi Arabia would be denominated in U.S. dollars. This petrodollar system was adopted by almost the entire world and it has had great benefits for the U.S. economy. But if China becomes Saudi Arabia's most important trading partner, then why should Saudi Arabia continue to only sell oil in U.S. dollars? And if the petrodollar system collapses, what is that going to mean for the U.S. economy?..."

at http://theeconomiccollapseblog.com/archives/saudi-arabia-and-china-team-up-to-build-a-gigantic-new-oil-refinery-is-this-the-beginning-of-the-end-for-the-petrodollar

HKMEx: to launch yuan-settled gold, copper futures by July

"The Hong Kong Mercantile Exchange (HKMEx) plans to launch yuan-settled gold and copper futures by July, its president said on Friday, as it looks to tap growing interest in commodities from Chinese investors..."

at http://www.reuters.com/article/2012/03/23/hkmex-futures-idUSL3E8EN2BL20120323

China yuan could be reserve currency with reform: IMF

"China's yuan could become a reserve currency in future if the country undertakes further economic reform, International Monetary Fund managing director, Christine Lagarde, said in a speech on Sunday..."

at http://finance.yahoo.com/news/china-yuan-could-currency-reform-055837428.html;_ylt=Aga_KFtcKYtaweINvlOrfhzzuYdG;_ylu=X3oDMTQwcjV2Z2xhBG1pdANUb3AgU3RvcnkgQ29sbGVjdGlvbnMEcGtnAzQxNDVkODI5LTU4YjgtMzczNC1hYzBkLTlhZjUxNmJhNGNiYQRwb3MDMTcEc2VjA3RvcF9zdG9yeQR2ZXIDOWY3ZDllZTAtNzBiZi0xMWUxLTk3YTktYmY1YTdjOWRjNGYw;_ylg=X3oDMTFrM25vcXFyBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdAMEcHQDc2VjdGlvbnMEdGVzdAM-;_ylv=3

The Chinese Yuan Is On Sale

"Last year I went down to our local bank and I picked up some cash. The cash I bought was Chinese Renminbi. After I told my wife, she asked why I was buying Chinese money and if I was planning a trip to China.

In point of fact, I will go to China one day on my travels, as it is one area of the world I have not yet visited. However, that was not the point of my visit to the bank. I have since made several similar visits to the bank, to buy a currency that was, in my humble opinion, on sale.

Now you don't have to buy cash. New ETFs are cropping up to take advantage of this currency sale. They include RMB, CHII, CHIA, and CHIE. Each one seems to offer a variant on the theme, so do your homework before investing.

China has a monster surplus of foreign exchange holdings, including $1.3T in U.S Treasuries. It is also noteworthy, that China has been buying gold, regularly, for the past several years for this account and has encouraged it's citizens to buy gold for the past three years. This was something unheard of in centuries past. No doubt, Chinese authorities have been paying attention to the rise in gold since 1997.

The Pan Asia Exchange has now created the first ever rolling spot contract that will allow individual Chinese investors to buy 10 ounces (the minimum transaction) of gold contracts in RMB, through their "bank" account, and directly linked to the exchange. For instance, if you have an account with the Agriculture Bank of China or ABC, you can instantly buy gold, or gold contracts.

This means 320 million new retail customers and 2.7 million corporate clients, all with the same Chinese appetite for precious metals, now able to buy gold in 10 ounce increments with just a mouse click!

China recently announced it is settling a number of international transactions with South American countries, in it's own currency, the Renminbi, instead of changing it into dollars first, to accommodate the transaction, as has been the case since the advent of the dollar as the world reserve currency after Breton Woods. This development alone should give you pause to consider this and similar articles.

As an investor, you should be aware of these new developments, as they beg the following questions.
Does China see a gold back Renminbi in it's future? Do the mandarins of the Chinese economy see the U.S. Dollar as a falling star? Is this the first crack in the dollar as the world's only reserve currency? Is it the first shot being fired in a worldwide currency battle? Is China merely pointing out that a basket of other world currencies should be considered along with gold, as the world's new reserve currency?..."

at http://seekingalpha.com/article/433791-the-chinese-yuan-is-on-sale

Manipulating the yuan debate dangerous game

"Some members of the U.S. congress are playing a dangerous game by manipulating the Chinese yuan debate for domestic political gains.
These congressmen, prompted by a need to appease American workers frustrated by the loss of millions of jobs in the global financial crisis, and to woo constituencies in elections to be held later this year, are resorting to their old trick of blaming everything on China.
They claim China's foreign exchange policy is costing America jobs and threaten to impose tough trade sanctions against Chinese imports.
But they choose to ignore the fact that an appreciating yuan cannot rebalance Sino-U.S. trade or help create jobs for American workers. Both trade imbalance and high unemployment are deep-rooted economic problems that can only be addressed when the United States implements some painful yet necessary structural reforms.
These congressmen claim they are the white knights defending the interest of the American people, but in fact, they are nothing more than a bunch of baby-kissing politicians trying to swing voters by manipulating the yuan debate.
They only served to divert the public attention from the much more serious domestic economic problems, which are caused in part by their incompetence.
It is really dangerous that these irresponsible remarks, played up by some sensational U.S. media outlets, will inevitably mislead the American public, and poison the atmosphere of Sino-U.S. economic cooperation.
The fact is that China now serves as the third-largest export market for American goods and it will probably become the biggest one sooner than expected. A growing Chinese economy has brought substantial benefits to American workers.
When they are manipulating the yuan debate,these American politicians may make some short-term political gains, but they put the long-term Sino-U.S. bilateral relations in jeopardy."

at http://news.xinhuanet.com/english2010/indepth/2010-06/13/c_13348628.htm