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Daily Archives: April 3, 2022

Charts: U.S. Non-farm Payrolls Add Less Jobs than Expected in March 2022

Source : Trading Economics

Chart: Divergence of Japanese Yen and Chinese Yuan

Source : Trading Economics

Humour: News in Cartoons

Chinese Homebuyers Shun Market Despite Government Revival Efforts

China’s property market remained in the deep freeze in March even as the government signaled its support for the real estate sector and more cities relaxed administrative curbs to stimulate homebuying.

Contracted sales by the country’s 100 largest property developers fell 52.7% by value in March from a year earlier, a steeper decline than in January and February, data released by consultancy China Real Estate Information Corp. (CRIC) Thursday show.


Source : Bloomberg, Caixin and Wall Street Journal

Charts: Renewables Became the 2nd-most Prevalent U.S. Electricity Source in 2020

Gold-backed Ruble Could be a Game-changer

The Bank of Russia has resumed gold purchases this week, but more importantly, the regulator is doing so at a fixed price of 5,000 rubles ($59) per 1 gram between March 28 and June 30, raising the possibility of Russia returning to the gold standard for the first time in over a century.

If the country takes the next step, as has been proposed this week, to sell its commodities priced in rubles, these combined moves could have huge implications for the ruble, the US dollar, and the global economy.

To get some answers, RT spoke to precious metals analyst Ronan Manly at BullionStar Singapore.

— Why is setting a fixed price for gold in rubles significant?

By offering to buy gold from Russian banks at a fixed price of 5,000 rubles per gram, the Bank of Russia has both linked the ruble to gold and, since gold trades in US dollars, set a floor price for the ruble in terms of the US dollar.

We can see this linkage in action since Friday 25 March when the Bank of Russia made the fixed price announcement. The ruble was trading at around 100 to the US dollar at that time, but has since strengthened and is nearing 80 to the US dollar. Why? Because gold has been trading on international markets at about US$62 per gram which is equivalent to (5,000 / 62) = about 80.5, and markets and arbitrage traders have now taken note, driving the RUB/USD exchange rate higher.

So the ruble now has a floor to the US dollars, in terms of gold. But gold also has a floor, so to speak, because 5,000 rubles per gram is 155,500 rubles per troy ounce of gold, and with a RUB/USD floor of about 80, that’s a gold price of around $1,940. And if the Western paper gold markets of LBMA/COMEX try to drive the US dollar gold price lower, they will have to try to weaken the ruble as well or else the paper manipulations will be out in the open.

Additionally, with the new gold to ruble linkage, if the ruble continues to strengthen (for example due to demand created by obligatory energy payments in rubles), this will also be reflected in a stronger gold price.

— What does it mean for oil?

Russia is the world’s largest natural gas exporter and the world’s third largest oil exporter. We are seeing right now that Putin is demanding that foreign buyers (importers of Russian gas) must pay for this natural gas using rubles. This immediately links the price of natural gas to rubles and (because of the fixed link to gold) to the gold price. So Russian natural gas is now linked via the ruble to gold.

The same can now be done with Russian oil. If Russia begins to demand payment for oil exports with rubles, there will be an immediate indirect peg to gold (via the fixed price ruble – gold connection). Then Russia could begin accepting gold directly in payment for its oil exports. In fact, this can be applied to any commodities, not just oil and natural gas.

— What does that mean for the price of gold?

By playing both sides of the equation, i.e. linking the ruble to gold and then linking energy payments to the ruble, the Bank of Russia and the Kremlin are fundamentally altering the entire working assumptions of the global trade system while accelerating change in the global monetary system. This wall of buyers in search of physical gold to pay for real commodities could certainly torpedo and blow up the paper gold markets of the LBMA and COMEX.

The fixed peg between the ruble and gold puts a floor on the RUB/USD rate but also a quasi-floor on the US dollar gold price. But beyond this, the linking of gold to energy payments is the main event. While increased demand for rubles should continue to strengthen the RUB/USD rate and show up as a higher gold price, due to the fixed ruble – gold linkage, if Russia begins to accept gold directly as a payment for oil, then this would be a new paradigm shift for the gold price as it would link the oil price directly to the gold price.

For example, Russia could start by specifying that it will now accept 1 gram of gold per barrel of oil. It doesn’t have to be 1 gram but would have to be a discounted offer to the current crude benchmark price so as to promote take up, e.g. 1.2 grams per barrel. Buyers would then scramble to buy physical gold to pay for Russian oil exports, which in turn would create huge strains in the paper gold markets of London and New York where the entire ‘gold price’ discovery is based on synthetic and fractionally-backed cash-settled unallocated ‘gold’ and gold price ‘derivatives.

— What does it mean for the ruble?

Linking the ruble to gold via the Bank of Russia’s fixed price has now put a floor under the RUB/USD rate, and thereby stabilized and strengthened the ruble. Demanding that natural gas exports are paid for in rubles (and possibly oil and other commodities down the line) will again act as stabilization and support. If a majority of the international trading system begins accepting these rubles for commodity payments arrangements, this could propel the Russian ruble to becoming a major global currency. At the same time, any move by Russia to accept direct gold for oil payments will cause more international gold to flow into Russian reserves, which would also strengthen the balance sheet of the Bank of Russia and in turn strengthen the ruble.

Talk of a formal gold standard for the ruble might be premature, but a gold-backed ruble must be something the Bank of Russia has considered.

— What does it mean for other currencies?

The global monetary landscape is changing rapidly and central banks around the world are obviously taking note. Western sanctions such as the freezing of the majority of Russia’s foreign exchange reserves while trying to sanction Russian gold have now made it obvious that property rights on FX reserves held abroad may not be respected, and likewise, that foreign central bank gold held in vault locations such as at the Bank of England and the New York Fed, is not beyond confiscation.

India ready to bypass dollar in trade with RussiaREAD MORE: India ready to bypass dollar in trade with Russia
Other non-Western governments and central banks will therefore be taking a keen interest in Russia linking the ruble to gold and linking commodity export payments to the ruble. In other words, if Russia begins to accept payment for oil in gold, then other countries may feel the need to follow suit.

Look at who, apart from the US, are the world’s largest oil and natural gas producers – Iran, China, Saudi Arabia, UAE, Qatar. Obviously, all of the BRICS countries and Eurasian countries are also following all of this very closely. If the demise of the US dollar is nearing, all of these countries will want their currencies to be beneficiaries of a new multi-lateral monetary order.

— What does this mean for the US dollar?

Since 1971, the global reserve status of the US dollar has been underpinned by oil, and the petrodollar era has only been possible due to both the world’s continued use of US dollars to trade oil and the USA’s ability to prevent any competitor to the US dollar.

But what we are seeing right now looks like the beginning of the end of that 50-year system and the birth of a new gold and commodity backed multi-lateral monetary system. The freezing of Russia’s foreign exchange reserves has been the trigger. The giant commodity strong countries of the world such as China and the oil exporting nations may now feel that now is the time to move to a new more equitable monetary system. It’s not a surprise, they have been discussing it for years.

While it’s still too early to say how the US dollar will be affected, it will come out of this period weaker and less influential than before.

— What are the ramifications?

The Bank of Russia’s move to link the ruble to gold and link commodity payments to the ruble is a paradigm shift that the Western media has not really yet grasped. As the dominos fall, these events could reverberate in different ways. Increased demand for physical gold. Blowups in the paper gold markets. A revalued gold price. A shift away from the US dollar. Increased bilateral trade in commodities among non-Western countries in currencies other than the US dollar.


Source : RT

WHO Warns Against New Mutant ‘XE’ Variant of Omicron; Says More Transmissible Than Any Strain of COVID-19

This new variant is a recombinant strain, meaning it is a mutant hybrid of the two previous versions of the Omicron variant, BA.1 and BA.2, which spread across the world when it first became a variant of concern

WHO warns against new mutant ‘XE’ variant of Omicron; says more transmissible than any strain of COVID-19
Representational image. Shutterstock

The World Health Organisation (WHO) has issued a warning against a new mutant ‘XE’ variant of Omicron, that may be more transmissible than any strain of COVID-19 seen before, according to a report by express.co.uk.

This new variant is a recombinant strain, meaning it is a mutant hybrid of the two previous versions of the Omicron variant, BA.1 and BA.2, which has spread across the world when it first became a variant of concern, it said.

Recombinants can emerge when multiple variants infect the same person at the same time, allowing the variants to interact during replication, mix up their genetic material, and form new combinations, a paper published in the British Medical Journal notes.

Although experts have pointed out that there is no reason to panic, there are currently three hybrid or recombinant viruses have been detected XD, XE, XF. The two different combinations of Delta and BA.1 are XD and XF. The third is XE.

The XD is the hybrid of Delta and BA.1, a sublineage of the Omicron variant and has been found mostly in France, Denmark and Belgium.

According to reports, the new variant is 10 per cent more transmissible than the BA.2 subvariant, which is already the most contagious. As per the WHO, BA.2, which is a subvariant of the Omicron strain, is the most dominant strain of the virus, being 86 per cent of all sequenced cases attributed to it.

While XE only accounts for a small fraction of the cases, its extremely high transmissibility could mean that it becomes the most dominant strain in the near future.

The WHO has recently issued a report outlining their initial findings of this potentially new variant of concern.

“The XE recombinant (BA.1-BA.2), was first detected in the UK on 19 January and less than 600 sequences have been reported and confirmed since,” the report said.

“Early-day estimates indicate a community growth rate advantage of 10 per cent as compared to BA.2, however, this finding requires further confirmation,” it added.

The global health body noted that until they can detect “significant differences in transmission and disease characteristics, including severity”, XE will remain categorised as a part of the Omicron variant.

“WHO continues to closely monitor and assess the public health risk associated with recombinant variants, alongside other SARS-CoV-2 variants, and will provide updates as further evidence becomes available,” the report continued.

The WHO report echoes the 11 March UK Health Security Agency report which said, “As of 22 March 2022, there are 637 XE cases in England. These are geographically distributed across England and increasing in number, with the first case detected via sequencing on 19 January 2022, and most cases in East of England, London, and the South East… The median growth rate is +9.8 per cent per week. Numbers were too small for the XE recombinant to be analysed by region.”

Susan Hopkins, UKHSA chief medical adviser, told South China Morning Post that XE had shown a variable growth rate but the agency could not yet confirm whether it had a true growth advantage. “So far there is not enough evidence to draw conclusions about transmissibility, severity or vaccine effectiveness.”


Source : Firstpost