Koos Jansen: The gold-backed oil-yuan futures contract myth

Section:

10:06a ET Sunday, October 15, 2017

Dear Friend of GATA and Gold:

Gold researcher and Chinese gold market expert Koos Jansen today argues that the Nikkei Asian Review's September 1 report asserting that China is planning an oil futures contract somehow "backed" by gold --

https://asia.nikkei.com/Markets/Commodities/China-sees-new-world-order-w...

-- is full of holes.

Jansen writes:

"China hasn't announced anything but an oil-yuan futures contract. Gold has nothing to do with it.

... Dispatch continues below ...



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"Yuan can technically be spent on gold at the Shanghai Gold Exchange but gold in the Chinese domestic market (the Shanghai Gold Exchange system) is not allowed to be exported. Gold from the Shanghai Gold Exchange International is allowed to be exported but is bought in the international market via yuan with U.S. dollars.

"Foreign enterprises, like oil producers, cannot hedge gold on the Shanghai Futures Exchange. The Shanghai Futures Exchange is not open for international customers. There is only a spot-deferred product listed on the Shanghai Gold Exchange, which is comparable to a futures contract, through which foreign enterprises can hedge gold in yuan. But why would oil producers buy gold and subsequently hedge the metal in yuan? Their end position would be merely exposure to the price of yuan. Why then not buy a yuan-denominated bond with an interest rate? Or hold gold without the hedge?"

Jansen's analysis is headlined "The Gold-Backed Oil-Yuan Futures Contract Myth" and it's posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/the-gold-backed-oil-yuan-f...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

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