How To Profit From China’s Gold-Backed Oil Futures

There’s big news for investors who are eager to earn high returns from the price of gold in the near future. The age of the Petro Dollar may be coming to an end thanks to a new gold exchange in China.

In fall 2017, China launched an oil futures contract in Shanghai traded in yuan. It’s a sign that the rules of global oil trade may be about to change with a dramatic shift away from the U.S. dollar. All of Saudi Arabia’s oil is currently priced in USD, along with most other oil-producing countries (except for those under sanction, such as Iran and Venezuela).

China is now the world’s largest importer of oil and with their auto sector ramping up production to 30 million cars a year, it looks like they are only going to solidify their new position ahead of the U.S. in the coming years. That means China could be in a position to essentially force Saudi Arabia to start pricing oil in yuan, with the rest of the world following suit.

Big news if you’re investing in oil futures, but what does it have to do with gold? Knowing that traders are reluctant to take payment in yuan, China has already set up a yuan-for-gold exchange. They’re essentially offering gold-backed yuan as they push for oil traded in yuan. As long-term gold investors know, any move to re-establish gold-backed currencies is going to move the price of gold up – especially with the side of effects a PetroYuan would have on the U.S. dollar, including about $800 billion in transactions moving out of USD. When the USD loses value, investors flock to gold.

If you’re looking for tips for increasing your wealth, invest in gold before the gold-backed yuan becomes the new petro-currency. China has spent the last 4 to 5 years building its gold reserves and it will continue to drive demand for gold bullion if its plan succeeds. It’s a good time to invest in gold with a very positive short to medium-outlook.

Gold coins and bars are the most reliable way to start investing in gold, but the key to improving your return on investment is keeping premiums low. Online gold dealers like Silver Gold Bull typically have lower premiums thanks to their lower overhead. If you’re worried about the safety of having gold delivered, find a gold dealer that sends packages insured and delivers themin discrete packaging – so no one knows that it’s gold being shipped. You can also use allocated storage from a company like Silver Gold Bull, which may be even safer than keeping it in a bank. When you deposit your gold at a bank, the product you put in is not necessarily the product you take out. They record the quantity and type of gold you deposit, but it’s stored commonly. That’s additional third-party risk that many gold investors want to avoid in the first place. Allocated storage is like having a personal vault, secured and insured away from your home to discourage burglary. It’s the safest way to store your gold while you wait for prices to respond to major shifts in the global economy like China’s move to price oil in yuan.

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