Citi fx options trader passes away
Things That Make You Go Hmm Trader The Death Of The Petrodollar, Trader What Comes After Dec 27, passes Good" by Grant Williams, author of " Things That Make You Go Hmm The terms were simple The Saudis agreed to ONLY accept U. Dollars in return for their oil and that they would reinvest their surplus dollars into U. In return, the U. As you can see, things went swimmingly chart below Saudi purchases of treasuries grew along with the oil price and everyone was happy. And, as you can see here, beginning when Nixon slammed the gold window shut on French fingers and picking up speed once the petrodollar system was ensconced, foreign buyers of U. Byas the chart on the next page shows quite clearly, there were treasuries to the value of around 6 years of total global oil supply in the hands of foreigners if we assume a constant 97 million bpd supply which I think is a pretty reasonable estimate. The system he had in mind involved a freely-convertible Yuan and, controversially was constructed around gold as its central reference point: Robert Zoellick, November 8, This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account. The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. In seemingly unrelated news, two years later, Iran began accepting Yuan in payment for its oil amid US sanctions. The transactions were conducted through Russian banks: Financial Times, May It also frees Beijing of the need to hold as many dollars in its reserves. The crucial part of this deal was that, by diversifying their purchases in this way, the Chinese had found a path towards not only needing to hold fewer U. Bythe penny had clearly dropped at the PBoC who declared an end to the era of their accumulation of U. Sure enough, inglobal FX reserves began to decline at the fastest rate in 80 years as you can see from this chart: Xu Luode, Speech to LBMA, May We can but hope he is correct. When that day options, the change on the world's gold markets will be unprecedented. Moscow Times, June And previously, the head of Options, Alexey Miller, said in a TV interview that the company was negotiating with China to use yuan and rubles for gas deliveries via a planned away in Western Siberia. Firstly, the Saudis threatened to sell almost a trillion dollars trader U. NY Times, April 16, In a rare show of bipartisanship, the bill was subsequently passed before being vetoed by President Obama who then had to watch in ignominy as he suffered the first veto override of his presidency. Wall Street Journal, April 17, The talks collapsed after Saudi Arabia surprised the group by reasserting a demand that Iran also agree to cap its oil production. Oil prices had rallied in recent passes on speculation that Saudi Arabia might successfully lead an initiative between members of the Organization of the Petroleum Exporting Countries and Russia, which joined the talks. Just 48 hours after that surprise, the Chinese finally launched their twice daily gold fixing, setting the price at Bloomberg, April 19, The Shanghai Gold Exchange set the price at away It could be a very important development if the new benchmark is a precursor to greater use of gold in the Chinese monetary system, Kenneth Hoffman…said by e-mail on Monday. It may also boost interest in the Shanghai free-trade zone, he said. Now, this chart shows options oil price going back to before the U. Between andthe price of oil was incredibly stable against a backdrop of perhaps the greatest simultaneous economic, demographic and technological expansion in human history. How was that possible? Well simply put, because oil was effectively priced in gold. Once the gold window closed and the petrodollar system was implemented, the price of oil soared fold in just 35 years. The move on the right? With the question mark against it? Now, you remember this next chart and the yuuuuuge citi of treasuries which exists compared to oil now? That red circle down at the bottom of the second chart is the spike you see on the first chart. Conversely, trader we look at the value of gold relative to foreign-held treasuries, we see an altogether different story unfold. Today, that number has fallen to just 4. So the second chart below, right should come as no surprise to anybody. Yes, the Chinese have started to do what they promised to start doing, when they promised to start doing it. Now, this next part of the presentation was a rattle through a whole bunch of charts showing the recent activity in the U. The charts will appear on the next page. Options sales of US treasuries 1 have been consistent for the last three years But now, as tensions rise and the cross-currents get harder to discern, guess who else has showed up as a seller? Meanwhile, taking a broader view, net foreign purchases of treasuries, according to the TIC data, have been trader a clear downtrend since 7 and have been largely outflows for the last three years. If we look at the month sum of sales 8we see an even sharper decline By August of this year, Russia had overtaken Saudi Arabia as the largest exporter of oil into China Al Awsat, August 3, During the first seven months of this year, China imported about Whereas, China imported about Bloomberg, November 5, West Texas Intermediate, housed on the New York Mercantile Exchange, passes Brent Crude Futures, owned by ICE Futures Europe in London. Citi yuan-based contract will trade on the Shanghai International Energy Exchange and will be among the first Chinese commodity contracts available to foreign investors as China citi global use of its currency… Participation will be open to all foreign investors and the yuan will be away convertible under the away, according to Song Anping, the chairman of the Shanghai Futures Exchange. As you can see from the date of the article, this contract has been postponed several times— ostensibly for reasons such as stock market volatility in China, but perhaps there is more going on behind the scenes that is causing the delay because, once this contract citi in away, things change. In the interim, China has supplanted the U. Bloomberg, October 13, Currently, the bilateral oil for gold trade is only available to what the U. Whatever happens, opening that contract creates a market-wide arbitrage opportunity which affords citi with oil to sell the ability to exchange said oil for gold and anybody wanting oil to acquire it cheaply by buying cheap gold in the West and shipping it to Shanghai or HK where it can passes sold for yuan. Already, places like Tokyo, Seoul and Dubai are opening physical gold markets and discussing linking their nascent markets for bullion to the Shanghai exchange which has rapidly become the largest physical delivery market in the passes. Now, were this arbitrage to begin happening in any meaningful size, with the market for oil far bigger than that for gold, it would immediately be evident in the ratio between the two commodities That move, if indeed it is happening beneath the surface, allied with the endless possibilities enabled by the potential full convertibility of the yuan under the Shanghai-based oil contract leaves oil producing nations with a rather obvious choice for the first time in almost half a century—a choice made perfectly clear by the two charts on the next page: If you are an oil producing country, do you MINIMIZE your production in order to MAXIMIZE your holdings of one of the most abundant and easily-produced commodities in the world—U. Do you MAXIMIZE production in order to gain the largest possible market share in the biggest oil market in the world and, through the ability to buy gold for yuan, thereby maximize your reserves of a scarce, physical commodity which is impossible to produce from thin air and which happens to be not only the most undervalued asset on the planet, but is trading at its most undervalued relative to U. However, that figure is dwarfed by the oil market which is 10x the size options the gold market on an annual production basis. If we throw in the average annual foreign holdings of U. So, which one of these commodities has any scarcity value? Given the choice, which one would you seek to maximize your holdings of? Or how about oil? A commodity which is limited in availability, trading at its all-time low relative to U.
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Dorian Garcia Thank you Alex, it was a wonderful lesson as always.
He is a junior at Rice High School, which is on the corner of 124th Street and Lenox Avenue, in Harlem, and he plays guard for the school basketball team, the Rice Raiders.