Immediately (and this is the part that ought to make your trigger finger twitch involuntarily and your heart slam-dance against your ribcage), oil, precious, precious oil, which is priced in dollars, becomes instantly 2.1% cheaper for the Chinese! The price to us is (big sigh of relief!) unchanged. So far. Note the caveat "so far", which is very meaningful to those of you with sharp eyes.This is the next step in the removal of the Dollar as the world's reserve currency. And while I believe this is a very good thing in the long run, the adjustments to this New World Order are not going to be painless. The death throes of an Empire are never pretty. Honestly, I don't think we've seen anything close to the worst that the Powers That Be can dish out. My biggest fear is that it's only the beginning.
But the oil exporters have to be looking at this, too, and figuring that getting paid in dollars is really, really, really stupid if they are going to turn around and buy something from the Chinese. If they do intend to buy some Chinese products (and who doesn't?), then petroleum exporters just lost 2.1% of their buying power! In one day!
Me? I'm in agreement with Jim Sinclair in that I see the Cando as a benficiary of this turn of events. Canada is one of the world's biggest suppliers of oil, and produces a substantial amount of the oil we consume. Read further in the Mogambo's Latest Massive Missive (MLMM) and you'll see some disturbing numbers relative to electricity demand.
I've been a little shy about actually making any moves into foreign Currencies, but the current pieces of information lead me to think that there is still substantial upside in both the Canadian Dollar and the Australian Dollar. For a reasonable amount of money you can hedge your bets with an Everbank World Currency Account.
Ta,
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