G7 Investors Should Worry About Gold-Backed Renminbi Eclipsing Dollars, Commodity Encumbrance

29 Dec 2022

Zoltan Pozsar: G7 Investors Should Worry About Gold-Backed Renminbi Eclipsing Dollars, Commodity Encumbrance

December 29, 2022

Credit Suisse contributor Zoltan Pozsar has continued his ongoing series about Bretton Woods III where commodities will dictate the new world order. For his last dispatch of the year, he described how the world is now shifting to a multipolar order “being built not by G7 heads of state but by the ‘G7 of the East’ (the BRICS heads of state).”

BRICS stands for the group of five nations: Brazil, Russia, India, China, and South Africa. But Pozsar said that with the poised expansion via rumored applications for Saudi Arabia, Turkey, or Egypt, he took the liberty to round up the current “G5.” […]

[…] The ascension of petroyuan is not something that is just about to start, it has already been set in motion. Among the OPEC+ countries, Russia and Venezuela are already accepting payments for oil in renminbi at steep discounts.

China also inked the Comprehensive Strategic Partnership with Iran – “a 25-year ‘deal’ under which China committed to invest $400 billion into Iran’s economy in exchange for a steady supply of Iranian oil at a steep discount.” It stipulates $280 billion toward developing downstream petrochemical sectors (refining and plastics) and $120 billion toward Iran’s transportation and manufacturing infrastructure in exchange for energy exports at a minimum guaranteed discount of 12% to the six-month rolling mean price.

The China-Iran agreement has the same spirit to what Xi’s speech is saying at the summit with GCC: “investments in downstream petrochemical projects, manufacturing, and infrastructure… [in exchange for] renminbi settlement.”

“Russia, Iran, and Venezuela account for about 40 percent of the world’s proven oil reserves… the GCC countries account for 40 percent of proven oil reserves as well (with Saudi Arabia accounting for half)… and are being courted by China to accept renminbi for their oil in exchange for transformative investments,” Pozsar summed up. […]

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