Yuan Devaluation Adds to Commodities Gloom



Comments (8)

  1. joe says:

    The Chinese are devaluing their currency so it will match their gold reserves and they can back their currency by gold. Than the Saudis will announce that they are trading oil in yuan and NOT the U.S. Dollar. Welcome to the end of the world, kids.

    [Reply]

    Tim Maverick Reply:

    Joe, thanks for your comment. I agree with you. The end game is likely a Chinese currency at least partially backed by gold.

    And there are rumors that the Saudis and others in the region will soon accept yuan for oil. Not good for the petrodollar.

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  2. Wade Hrappstead says:

    October 20 IMF ( Yuan ) to be a world currency?
    Watch for the announcement!

    [Reply]

    Charles H Reply:

    The (Yuan) acceptance by the IMF has been postponed until Dec. 2016.

    [Reply]

  3. Silber SHARK says:

    KISS: Keep Investing in Stacked Silver 😎

    [Reply]

  4. chitra mathew says:

    Oil reserves in Arab oil fields (OPEC) is very much more than reported by Energy department or any official data available. Also, according to an expert in USA Saudi’s marginal cost to produce oil is only $2. Therefore even $20 oil will be boon and they will keep increasing their production.
    I don’t think China will get reserve currency status. Their largest customer is USA. Also, according to a WSJ report China wants to move away from being a export-led economy into consumer growth economy like USA. In USA customer spending constitutes about 60% of GDP. Or is it 75%? Lets drink to that!

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  5. James Fedor says:

    I don’t understand how foreign currency devaluation would lower the cost of commodities production for those countries if the production costs are in dollars. Would not the cost of production be higher?

    [Reply]

    Tim Maverick

    Tim Maverick Reply:

    Thanks for your comment. In many cases, the cost of commodity production (such as labor and local suppliers) are priced in the currency of the country where the commodity is mined. For example, South African gold miners are paid in rand and Chilean copper miners and paid in pesos.

    The WSJ spoke about this phenomena today: http://blogs.wsj.com/moneybeat/2015/09/13/commodities-producers-currency-prop/?mod=djemMoneyBeat_asia

    [Reply]

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