Five ‘Dry Runs’ Successfully Completed as China Prepares to Launch its Gold Convertible Petro-Yuan

from SilverDoctors:

New reports are coming in on the extensiveness of the testing for the oil-for-yuan contract. Here’s the details…

March 26th is the tentative date. We’ve got our calendars marked, but first, an attempt to clarify some confusion people have about the petro-yuan.

Why?

Because discussing the petro-yuan, and the convertibility of yuan into gold, either in Shanghai or on the LBMA where gold is priced in Yuan, is about as polemic in the gold & silver community as Bitcoin. Perhaps even more so than Bitcoin.

As you will see below, it’s not even us saying the oil-for-yuan contract is convertible to gold, but a well respected news agency.

Regardless, to help clarify some of the confusion, here’s two points I argued pertaining to what everybodyseems to be missing about the whole oil-for-yuan/oil-for-gold contract:

The first point is a counter to this statement which everybody accepts as doctrine: Anybody can buy gold with dollar at any time – no gold-backed oil contract needed.

Let’s think about “anybody can buy gold with dollars now” for a moment.

Dollars come from the United States. The benchmark global gold price in dollars comes from the United States.

It makes sense that if a company/country is selling a crap-ton of barrels of oil for dollars, said company/country would be most efficient in purchasing their physical gold on the COMEX with those dollars.

It’s not like a company or country can walk into some local coin shop with $350,000,000 in U.S. dollars and scoop up a 259,259 Chinese Gold Pandas.

They need the COMEX.

Here’s the problem: If the U.S. futures market price of paper gold is nothing more than a debt based fiat currency price for something that never actually gets delivered, but rather, gets cash settled with more debt based fiat currency, then the company/country that just sold their oil for dollars is not really able to just take those dollars and buy gold as the “matter-of-fact” statement claims.

Secondary note to the first point:

We see what happens to world leaders when they announce or  begin to sell their oil for something other than dollars.

Anybody who is not familiar with this, the answer is death of said leader and destruction/plundering of the country by the war machine.

There is a flip-side to the oil-for-gold proclamations that we are missing:

Say Oil producers Canada or Mexico, or pick some non-bedfellow countries that attract the war machine, such as Turkey, Syria, Iraq, or Venezuela, who all of the sudden decide, “We are selling our oil for dollars, but we will immediately take them and buy physical gold from the COMEX with all the proceeds.”

Are the neo-cons, the deep state, the ESF, the Fed, the gold cartel and the other nefarious players just going to sit by and say:

“sure dude, whatever floats your boat”.

Not a chance. Said groups will spring into action, most likely of the swift and violent type.

To say “anybody can buy gold now” with their dollars misses the point.

The second point is even simpler:

The bigger picture that everybody keeps missing has to do with one of the principle reasons that people will use an un-backed, debt based fiat currency: CONFIDENCE

Whether the oil for gold contract is true or false, myth or fact, it misses the point that China is looking for confidence in something other than the dollar.

So back to the new details on the oil-for-yuan contract. 

Here’s the latest from RT (bold added for emphasis):

The petroyuan is seen as Beijing’s challenge to the US dollar, the dominant global currency in oil contract settlements.

The contract could reportedly be launched on March 26 on the Shanghai International Energy Exchange (INE). The exchange has recently received the approval from China’s State Council.

In December, the INE announced a successful completion of the fifth dry run in yuan-backed oil futures contract trading. It said that 149 of its members traded 647,930 lots in the rehearsal with a total value of 268.2 billion yuan. The exchange said the system met the listing requirements of crude futures after the exercise.

The Chinese government announced plans last year to start a crude oil futures contract priced in yuan and convertible into gold. The contract will enable the country’s trading partners to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars.

Now, tie this latest new with what Russia just said yesterday:

Russian financial institutions are prepared to survive without access to SWIFT (The Society for Worldwide Interbank Financial Telecommunication) – the global dollar-based interbank payments network – should the US and European Union follow through with threats to cut it off, according to Deputy Prime Minister Arkady Dvorkovich.

“Certainly, it is unpleasant, as it will prove a stumbling block for companies and banks, and will slow down work. It will be inevitable to deploy some aged technologies for information transfer and calculations. However, the companies are technically and psychologically ready for the shutdown as this threat was repeatedly voiced,” Dvorkovich said, according to TASS and RT, adding that such a dramatic step would negatively corporations doing business in the US and Europe.

“In general, disconnecting Russia from SWIFT would be a crazy step on the part of our Western partners. It is obvious that for the companies which work in Europe and the US it would be harmful. And this applies not only to the shutdown of the service,” he said.

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