In order for the yuan to openly challenge the U.S. dollar, petroyuan volumes will need to be large enough to attract the attention of speculators and investors globally. OilPrice.com reports that on the first day of trading, a respectable 15.4 million barrels of crude (about $1 billion worth) were traded in the September contract with Glencore, Trafigura and Freepoint Commodities among the first to take positions. Jeff Brown, president of FGE, an energy consultant, told Reuters that “The government (in Beijing) seems determined to support it, and I hear a number of firms are being asked or pressured to trade on it, which could help.”

One day does not a market make, but it is interesting to note that on March 26th, the yuan appreciated sharply against the U.S. dollar reaching its highest level in 31 months. Gold, it is worth noting, followed it higher along the exact same timeline. Whether or not the petroyuan establishes itself as atour de force that openly and effectively challenges the petrodollar, its journey is something that warrants our close attention. Needless to say with everything else that is going on in the financial markets these days, the petroyuan is one component that has not been even modestly factored into the equation.

The Reuters article by Kate Duguid, China oil futures launch may threaten primacy of U.S. dollar quoted at the top of this post is an excellent starting point – a must read. Though the word “gold” is never mentioned, it offers one of the most persuasive arguments in favor of acquiring the precious metal to surface in a very long time.