2011-11-22

Renminbi versus oil; gold

In Yuan and Oil—The Bubble Connection?, I presented Hugh Hendry's argument that Chinese revaluation was fueling the rise in oil prices in 2008. When I saw speculation that China had intervened to defend the yuan, I remembered this story. Also, I believed that gold had become China's new asset of choice and that it would replace oil.
What do Chinese want to buy today? Yes, they still need oil and natural resources, but to my mind, what's more popular (besides real estate, which should also appreciate) is gold.
With that in mind, here are the charts of renminbi versus oil, updated through the end of October, and a new chart with gold. I lined up the axis to make the trends clearer, but the only thing to look for is similar patterns; these charts say nothing with regards to relative changes.

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