Commodity Trade Mantra

Posts Tagged ‘Renminbi’

Hope in Currencies is a Poor Investment Strategy - Trust in Gold is Better

If somebody gives you gold, you don’t have to trust them or the instrument that you have been given – they represent payment in & of itself. Fiat currencies are not really payments. They’re promises to pay, and they work well as long as social trust remains. How long will the trust remain? Well, hopefully for my lifetime & yours too, but hope is a very poor investment strategy.

China Embraces Gold In Advance Of Post-Dollar Era

To challenge the US dollar hegemony & increase its power in the global realm of finance, China has firmly embraced gold in its economy. With a staggering pace the government has developed the Chinese domestic gold market, stimulated private gold accumulation, increased its official gold reserves to ensure financial stability & support the internationalisation of the renminbi.

China Is Now In Control Of The Global Silver Prices

China has been an unofficial price-setter for most metals over the past decade. And this week, China became an official participant in setting prices for one of the world’s most important precious metals markets – the London Bullion Market silver price. One of China’s largest banks just became a member of an elite group of players that controls fluctuations in this key metal.

Is The Rally Beginning, Or Is That It For Gold Prices?

Following the sharp fall back in gold prices to near US$1,200 an ounce, Bloomberg’s headline said ‘Gold coming back down to earth’. Gee, sounds scary. Is that it for gold then? Is the bear market about to resume? My personal view: As long as the price doesn’t fall back below US$1,160, gold looks good for another move higher, which would put an end to the bear market.

Why QE4 Is Inevitable - What could turn Sentiment more Positive?

According to Deutsche, and soon according to virtually all sellside strategists who are slowly but surely grasping the significance of what we have been warning for month on end, QE4 is inevitable. The only problem is that when the Fed pivots from “imminent rate hike” to QE4, it will loose the last shred of credibility it had left. The Fed is now completely trapped.

What China's Devaluation Means For The Future Of The Dollar

Nearly every government, commercial bank & central bank in the world holds US dollars in reserve as they are used as the primary currency in global trade. But this status is by no means written in stone. The US dollar is not the first global reserve currency, and it won’t be the last. It’s foolish to expect a reserve currency with such pitiful fundamentals as the US dollar to last forever.

BRICS Bank Officially Launches As Sun Sets On US Hegemony

On Tuesday, ahead of this year’s summit in Ulfa, the BRICS countries officially launched the new bank along with the reserve currency pool. Brazil, Russia, India, China and South Africa (BRICS) will also look to begin settling more trade in national currencies. The Chinese yuan as the leading currency can be used in settlements among BRICS member states.

Gold Price Doesn't Move, Despite Global Financial Turmoil

For the first time ever a developed country has defaulted on an IMF loan, the future of the euro is at stake & demand for physical gold in Europe is strong. The stock market of the world’s second largest economy declined by nearly 30 % in less than three weeks, but the gold price doesn’t move. Surely, the last thing authorities need at this moment is gold on the move.

“Wrestling with Something Else”: Why this Gold Bear Market Is Different

Let’s begin with the gold bear market that began in 2011. What do you believe caused it? Do you think this is cyclical or a secular bear market? I share my thoughts here on how we arrived in the current bear market, what factors might help us get out of it and the role real interest rates play in gold prices.

PBOC Gold Purchases: Separating Facts from Speculation

PBOC buys gold with their foreign exchange reserves than with renminbi – China’s FX reserves are worth about $3.7 trillion & mostly held in USD. Gold on SGE is quoted in renminbi, so PBOC can’t exchange USD with gold there. PBOC is likely to buy gold abroad & these purchases should be added to the visible gold flows.

China’s Silk Road Economic Project Will Include Gold

It was first disclosed by Albert Cheng, Managing Director of World Gold Council, in a speech Apr 12, 2015; China has ambitions to include gold in the One Belt One Road (OBOR) economic project. His proposal suggested that cooperation & development mechanism to involve major gold producers/users along the OBOR.

The Next Gold Bull Market Starts Before October

China believes the renminbi is “ready for reserve status.” What’s the connection to gold? If Chinese officials seek “reserve” status for the currency, they’ll want to announce their updated gold holdings beforehand. Demonstrating they hold ample gold reserves puts the currency on more solid footing.

China’s Pivotal Role For Gold And Silver: More Questions Than Answers

The inclusion of renminbi will not go into effect until Jan 2016, at the earliest. Will this be the often touted gold and silver reset that will cause prices to reach much higher levels? That remains to be seen. We believe there is no chance whatsoever that China will have its currency be gold-backed, that is convertible into gold.

China’s Gold to Come to Light After Six Years of Mystery?

The secrecy over China’s gold reserves may end sooner than expected. Why? China’s primary objective is to transform the renminbi into a global reserve currency.China may come clean on its gold holdings any time before the IMF meeting next October in an effort to show the soundness of the renminbi.

Gold, the SDR and BRICS

There are difficulties when it comes to including gold in the SDR basket as none of its paper constituents are convertible into gold. It also cannot last long as major central banks insist on printing money as an economic cure-all. But China’s position with respect to gold & her own currency could be a different matter.

Gold Backed SDR "Is Quite Likely To Happen", LSE's Lord Desai Warns

Some argue that “no other global currency is ready to replace the U.S. dollar.” That is true of other paper and credit currencies, but the world’s monetary authorities still hold nearly 900 million ounces of gold, which is enough to restore, at the appropriate parity, the classical gold standard: the least imperfect monetary system of history.

The Simple Test to Determine if Gold Is at a Bottom

The industry can’t produce any more gold at these prices & that impacts the supply side. It certainly meets the test of being a contrarian investment. In our opinion, sentiment is pretty much rock bottom. It has gotten better with this rally, but in the bigger scheme of things, people still scoff at the idea of gold. That is one sign of a bottom.

China Cuts Interest Rates - 21 Central Bank Easings In 2015 Till Now

The decision to cut benchmark interest rates again has been widely expected by the market. There was also some speculation that the deposit rate ceiling would be increased. The cut to the benchmark lending rate is also smaller than the last cut in November (40 bps). This may make some observers view the move as cautious.

Will China's Currency Peg Be the Next to Fall?

A pegged currency rises & falls against other currencies along with the underlying currency. As the dollar weakened from 2010 to mid-2014, China’s Renminbi weakened along with it. Now that the USD has gained 16% in less than a year, that’s dragging the RMB / Yuan higher with it, making China’s goods less competitive outside the US.

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