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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (135399)	9/3/2017 7:02:57 PM
From: TobagoJack	Respond to of 217571

re <<My question though is: Will this work without a fixed exchange rate between yuan and gold? The dollar established its hegemony by being convertible to gold at a FIXED exchange rate>> certainly a good question to a possibly material macro development, and one only can be guessed at for now. (1) Gold and energy certainly should have an operational link, for besides cyanide and labour, the cost of gold would mostly be attributable to energy. (2) Admittedly the cost of gold has not much to do w/ the price of gold, especially as annual production is less than 3% of the stock of gold in ever expanding above-ground inventory. (3) Gold was at one time linked to the US Dollar at a fixed rate, whereas effectively the USD and oil was served up at a floating rate. (4) Now some folks are trying to tee-up an oil / RMB / gold floating exchange rate, which by proxy would fix an effective RMB / gold / USD, and RMB / USD floating exchange rate. This is the 'interesting' you pointed out. (5) I reckon the one very important issue be the liquidity and depth of the market, and the identity of the players in such an oil / RMB / gold / USD market. (6) By not fixing a fixed exchange rate between RMB and gold, the market can only express itself on value of oil / RMB / gold / USD by the constant ticks of the last trade, as opposed to engaging in concerted attacks on the RMB-gold fixed exchange rate. The Saudis can presumably rest easier knowing the market shall discover the correct RMB-gold exchange rate, and Beijing can sleep easier knowing that should folks downward-manipulate / suppress gold pricing in RMB terms, thus affecting the USD-gold exchange rate, they can snarf up more gold on the international market, and Should folks bid up gold, the gold in inventory would be worth more. (7) However events turn out, the officialdom would be hard-pressed to maintain that gold is an anachronism, a quaint something, and is-not money something else, for when one can buy oil with gold, gold is useful, irrespective of whether it is money. (8) Once gold is officially tee-ed up as a useful alt-bitcoin, gold-backed bonds, etc should not be too far behind, and all the attention would tend to make the paper gold trade more dangerous than now, as the players and motivations of the players starts to matter, especially as physical delivery becomes necessary, unless the Saudis (unlikely) prefer paper gold to physical metal. Let us watch and brief.