Physical gold is about to mark its return at the center of the settlement system for oil transactions – a first step toward a reintroduction at the center of the international monetary system.

The months and years to come shall mark a radical change within the international monetary system, driven by China and the oil exporting countries.

China, after years of preparations, (with the help of intriguing gold price moves), just announced the programmed ending of the post-Bretton Woods monetary system. How so?

By launching futures contracts on oil denominated in Yuan before the end of this year… thus allowing oil exporting countries to be paid in Yuan in exchange of their oil – they can then buy physical gold on the Chinese exchanges in Shanghai and Hong Kong. Yuan-denominated gold futures have existed since 2016 – but these new futures contracts on oil denominated in Yuan are changing the picture: oil will be sold for Yuan that can then be converted into physical gold.

All this has been planned for years in silence (in the Western media, at least) through the setup of several platforms to allow a better convertibility of the Yuan internationally, as well as the signing of bilateral exchange agreements with commodities producing countries, Russia being the most important.

Many oil exporting countries that still do not trust the Yuan (or under the threat of American sanctions) will therefore switch to this new Chinese “system”, logically, in order to avoid using the dollar, and exchange their oil, first, for Yuan and, then, exchange their Yuan for physical gold. This will simply reintroduce physical gold at the center of oil transactions and, consequently, at the center of the international monetary system, by putting an end to the system that has given its power to the United States: the Petrodollar system.

An interesting coincidence: in the meantime, gold has officially exited a long bear market by breaking above the symbolic level of $1,300.