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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 386.01+1.6%Nov 12 4:00 PM EST
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To: TobagoJack who wrote (135788)9/28/2017 12:14:28 AM
From: Elroy Jetson  Read Replies (1) of 217734
 
By instituting "currency controls" to stabilize the value of the Yuan at the level China's leaders promised the IMF, this means the Yuan is not fully convertible and only some people can convert their Yuan into other currencies.

Initially China has placed foreign investors at the head of the queue, meaning many Chinese firms wanting to obtain foreign currency to buy other companies or foreign assets have been told "No, no foreign currency conversion for you right now."

A country like Saudi Arabia would be pleased to be paid in Yuan if the currency is fully convertible for them and the Chinese central bank can instantly convert this into what ever they want whether this is Dollars, or Euros, or Brazilian Reals. But if China tells Saudi Arabia, "No, not right now we can't convert your Chinese funny money into what you prefer," then Saudi Arabia would be foolish to accept over-printed funny money nobody wants.

This is fundamentally obvious to everyone but you. This means China has to put fall-back procedures into place to keep the oil flowing, like an oil futures market scheme to hoover up gold from their citizens so China can have access to something readily convertible to keep buying oil and other vitally needed supplies.
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