It all started with a headline on September 1, 2017 in the Asian Nikkei Review.
“China sees new world order with oil benchmark backed by gold”
The opening sentence read “China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.”
Expected by whom? was my first question.
No one seemed to be asking the question, other than as I found out a week or so later, Koos Jansen who also found the story remarkably unbelievable and unsourced.
While the alternative media does a good job of investigating current event stories like the Las Vegas shooting, it does a horrible job investigating stories for which it has a favorable bias.
Rather than check the veracity of the gold-backed Yuan story’s origins, alternative media analysts and commentators immediately set about speculating what the new gold backed Yuan might mean.
GAME CHANGER!, GAME OVER FOR THE DOLLAR! and similar breathless proclamations came from alternative media outlets.
There was a problem however, the story wasn’t true. It was another “Fake But Accurate” stories that fit the de-dollarization narrative.
Rory Hall of the Daily Coin interview Alasdair Mcleod of Gold Money who was interviewed in the Asian Nikkei Review Gold Backed Yuan. As Mr. Mcleod explains in the video below, it is anticipated that China will launch an oil futures contract denominated in Yuan. He made it clear that oil producers receiving proceeds under that contract would not be able to redeem it for gold from China but rather would have to enter into a seperate contract to receive gold outside of China.
Mr. Hall astutely asked if the two contracts were linked in any way. Mr. Mcleod said they were not. Thus, there is no gold backed or gold redeemable Yuan under Mr. Mcleod’s version of the story. Indeed given there has been no announcement from China regarding a gold backed Yuan or Yuan redeemable in gold contract, Mr. McLeod’s version is the most reasonable explanation of what might happend.
But his version doesnt constitute a gold backed Yuan or a Yuan redeemable in gold. It merely highlights that oil producers MAY chose to purchase gold with their proceeds from the Yuan denominated oil futures contract.
Saxo Bank analyst John Hardy also fell for the “news” of a coming gold backed Yuan. In a research report Mr. Hardy wrote “The initial focus is on the global oil trade, where it has announced the intention of buying oil in yuan and allowing trade partners to settle that yuan in gold”
.@johnjhardy Where's support for statement"[China]has announced intention of buying oil in yuan/allowing trade to settle that yuan in gold'?
Since certain Chinese trading partners (those subject ot sanctions like Russia, Iran and Venezuela) already accept Yuan and given China’s desire to internationalize the Yuan there will most likely be a Yuan denominated oil futures contract announced in the coming months, but there is no indication that it will be gold backed or redeemable in gold.
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