www.armstrongeconomics.com
China keeps moving gradually to open up their economy to international
forces. The People’s Republic of China has expanded the trade in gold in
yuan and thus the internationalization of the national currency is
moving closer. Gold merchants from the industrial metropolis of Shenzhen
have been trading their yuan gold at the Hong Kong Stock Exchange since
last week. Previously, this was only possible for Hong Kong gold
traders. While some immediately claim this is China attacking the
dollar, they are completely ignorant of international capital
necessities.
This new connection between Shenzhen and Hong Kong follows the Hong
Kong-Shanghai agreement reached in July 2015, which allowed Hong Kong
dealers to trade gold in mainland China for the first time. Trading gold
in yuan has one primary advantage. It is not going to unseat the
dollar, it is all about trying to make the currency free-floating on the
world market. Because gold can be traded in yuan, the common converter
becomes gold between that and the dollar. It is NOT really a gold trade as much as it is an indirect means to trade the currency.
To unseat the dollar requires a place to PARK big money
in yuan. That does not exist right now. That day is coming after 2031.
This is another step in moving toward a free-floating yuan contract.
Essentially, this is a formal proxy for a free-floating yuan and will
replace the Bitcoin trading that has been used as the proxy to get money
out of China.
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