 Good day fellow investors. On Monday something historical happened. A yuan denominated oil contract exchange, future contract exchange could be a game changer for the global perspective on currencies for the global reserve currency, the dollar. And today we're going to explain what happened, how it's going to impact the dollar in your portfolio and what you should do. So a future oil contract is one where you buy a certain amount of oil at a future date. Since Monday, March 26, future contracts have started trading at the Shanghai International Energy Exchange. The exchange is in a free trade zone, which means that foreigners can trade on that market too. Now some say it is the end of the dollar as the dominating currency in the world. Some say it will have absolutely no impact. Let's dig into the two perspectives and see what is the most likely outcome and how will that affect us. So the positives for the yuan and other currencies in the world. If you wanted to buy oil up till now you had to buy it through the dollar. So everything was denominated in dollars. Now Chinese companies can buy oil without having any fears about currency fluctuations. What they pay in their own currency will be the actual price when the oil is delivered at an actual at a later date. So that's one. Further now the question becomes as China is the biggest importer of oil in the world and has surpassed the US, will the oil markets shift towards China and put pressure on the petrodollar which has been used in oil transactions since 1974 and the contract between the US and Saudi Arabia. So we'll see how that affects and whether that will affect. People that say that it won't have a big effect is that everything in China is controlled. So nobody would like to invest or be exposed to a controlled currency plus the Chinese government doesn't like speculation and there is a lot of speculation on an oil market especially an oil futures market and there is fear that the Chinese government will intervene into that market. Some have said like Peter Schiff or Maloney, the gold bugs here on YouTube that the Petro Yuan is backed by gold. That's false, that's fake news. I haven't seen any reliable source saying that and I haven't seen any official source saying that. So everything can be exchanged to gold but it's not backed by gold. So it's not fixed to gold. So this doesn't have any impact on gold prices and it shows also that their thesis about gold is just to pump up whatever theory they have to sell their product. It's not a real unbiased picture on gold. Gold can go up but gold can also go down. So that's always the risk reward perspective on gold. You can check my video on gold. Back to the petrodollar. On the other hand if companies, corporations, countries start losing faith in the dollar as a global reserve currency and they start putting more faith into the yuan as China grows in power. Asia has 4.5 billion people. North America half a billion people. Europe 800 billion people. So there is much more weight that goes the Asian way, the Chinese way. So over the long term there will be a slow shift from the dollar as a reserve currency to other global currencies and what China is doing now, that's why it's a historical date. It won't have an impact now but over the long term they are preparing for taking over, maybe not taking over the dollar but really preparing a strong counterbalance to the dollar. This means nothing will change now because that's how financial markets work. 10 days ago Tesla was a sound company, the stock price was high and everything was okay. Then in one second Moody downgraded reports about autonomous drive failures about the slow production of the Model 3 and now the stock has crashed and Tesla is a broken stock, perhaps a broken company if they won't be able to refinance. So in just one moment everything shifted and this is what the Chinese government is playing on. If in the next 10-20 years people lose confidence in the dollar and there is something similar ready with all the infrastructure in place, oil futures market, gold futures market, whatever and free trade which they will slowly allow and they will perhaps even let the yuan lose in time, then there is a shift, okay we can now shift from the country that's losing the world dominance to a country that's becoming the world's most powerful economic force and there is nothing we can do it whether we like it or not, China will become the most powerful economic force in the world. So that's something to think when you invest and when you position yourself over the very very long term. The impact on the dollar, this is the game changer. Now you had to have US dollars if you wanted to buy oil and if you were selling oil you were getting US dollars. What do you do with excess dollars you invest in US treasuries. Now that people can do that in nuance they don't need dollars to buy so there is less demand for dollars and there is less supply for dollars because they are not getting dollars when they say oil especially the countries with excess supply of oil. So there will be less demand for US treasuries but we know that the US deficit has been piling up and it's getting bigger and bigger. If there is less demand for the currencies interest rates spike interest rates increase the debt burden becomes bigger bigger and bigger and this could really lead to an economic slowdown of the United States because of the weaker currency. Will it be counter affected by increased productivity or competitiveness to the because of the weaker dollar? Very difficult because there will be huge inflation if that happens and that would counter effect the positive effects. So this is now something that creates a risk not necessarily it would happen immediately but there is the risk of an immediate shift as things always change in the world. If we take a look at the global reserves currencies the yuan is not even on the list but perhaps in 10 20 years it might be there. So what to do from an investing perspective there is the possibility that the dollar weakens over time it's a debt fueled economy it wouldn't grow at all without all the debt and the money printing that has been going on in Europe Japan and the United States over the last 10 years. So debt is unsustainable over the long term the big deficits very difficult to manage we'll see how will that end up. So that's one way of looking at your thing the other way is okay that's the reserve currency of the world it will be the reserve currency for the next five ten years so I have nothing to worry but I'm just saying keep in mind what's going on in the world globally and start seeing okay I have a great business in I don't know a dollar you know denominated currency but I have a great business great investment idea in China which seems the same perhaps this is a little bit cheaper okay I'll pick this one to diversify my portfolio and you do that over the next 10 years and by diversifying across great businesses if you have a great business in the US currency it will do well even if the dollar weakens if you have a great business in Asia it will do well whatever happens so try not to think about what will happen to the currencies try to diversify across the globe by investing in great businesses and that's what we do on this channel we look to for best investments for best investment strategies to invest in the best businesses because that's the way how you outperform the market outperform currency fluctuations and whatever might happen in the future in the shorter term now you can get exposure to commodities precious metals hard assets real estate to be protected against inflation but that's again a hedge you never know when will that hedge actually work out so you have to see how much exposure to that you want in your portfolio or what's the yield in comparison to a normal stock on that hedging part of the portfolio thank you for watching looking forward to your comments what do you think of what's going on how will that impact China Europe US and the global trade economy see you in the next video