Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Shanghai, China One Step Closer to Becoming World’s Gold Hub

Commodities / Gold and Silver 2015 May 06, 2015 - 01:54 PM GMT

By: GoldCore

Commodities

- Shanghai Gold Exchange one step closer to becoming the globe’s major gold hub
- China tests system at Shanghai Gold Exchange (SGE) to establish yuan-denominated gold price fix
- SGE opened last year allowing trade in physical gold as opposed to electronic futures contracts on COMEX
- Yuan fix, which has broad regional support, will rival the century old LBMA fix
- China now world’s largest producer and buyer of gold
- Chinese government, central bank and people have affinity towards gold


Chinese ambitions to become the world’s leading gold trading hub and international financial hub have taken another step forward.

Trials were quietly conducted to launch a yuan-backed gold pricing benchmark last month, according to Reuters today.

China, the world’s largest gold producer and buyer, feels its market weight should entitle it to be a price setter for gold bullion. It is asserting itself at a time when the established benchmark, the century old London ‘gold fix’, is under scrutiny because of long-running allegations of price manipulation.

The new Chinese gold price benchmark may be launched before the end of the year.

The Shanghai Gold Exchange (SGE) opened last year and trades in contracts for physical gold (1 kilogramme). It has quickly been establishing itself as the fastest growing gold trading hub in the world as many participants in the gold market move away from the COMEX.

Many investors and miners have grown disillusioned with the COMEX system due to concerns that the price of gold is being manipulated lower by dumping contracts for vast amounts of gold onto the market which leads to sharp price falls and curtails positive sentiment and momentum in the gold market and reduces investment demand.

The new yuan benchmark is set to rival the century old LBMA system. It has broad regional support with the participation of foreign banks as well as those from China including western banks.

“Top Chinese banks including Industrial and Commercial Bank of China (ICBC) and Bank of Communications are members of the exchange, along with foreign banks Australia and New Zealand Banking Group, Standard Chartered and HSBC, among others,” according to Reuters.

The LBMA has been under pressure in recent years due to lack of transparency in the price fixing process. While the yuan fix will be determined by “members of SGE’s international board”, it will be against a backdrop of contracts for physical gold trading at the SGE.

The LBMA benchmark, on the other hand, is determined by bullion banks on the basis of undisclosed “over the counter” trades. The LBMA said last week it was considering the possibility of creating an exchange for gold trading in the city, a shift away from the over the counter (OTC) system.


SGE Gold Withdrawals – 50.796 tonnes for the week ending April 24th

The LBMA has been engaged in a public relations campaign to regain its credibility. The old system was reformed last year but the current system is, however, little more transparent.

Central banks are now being considered for membership of the LBMA. This will further undermine the LBMA’s credibility among some participants in the physical gold market given concerns that certain central banks may be involved of gold price manipulation.

An LBMA statement excuses the association from providing transparency, stating, “the role of the central banks in the bullion market may preclude ‘total’ transparency, at least at public level.”

At the same time it should give extra clout to the besieged association who, in their restructuring program, were forced to give some Chinese banks seats on their board. These banks have no say, however, in determining the benchmark.

The move to establish a yuan-based gold pricing benchmark is only natural. China is the world’s largest gold producer and officially the second largest buyer of gold. Although many believe that China has surpassed India in terms of gold demand and SGE withdrawals suggest this to be the case.

As Reuters report, “China … feels its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.”

It will be very interesting to see how the SGE and the LBMA interact in the coming years. The increasing importance of the SGE means that the physical gold market should assume more importance, as should the fundamentals of global physical supply and demand.

Shanghai and the SGE is emerging as the leading international gold bullion trading hub. This is a positive for gold due to the People’s Bank of China (PBOC) and Chinese governments favourable stance towards gold.

A favourable stance which is mirrored by the favourable disposition of the Chinese people – culturally the Chinese view gold as an important store of value.

Important Guide to Currency Wars: Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,191.25, EUR 1,063.41 and GBP 785.22 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,187.40, EUR 1,070.94 and GBP 785.59 per ounce.

Gold and silver saw small price gains yesterday of 0.35 and 0.73 per cent to $1,192.90 and $16.54 per ounce respectively.

In Asia overnight, Singapore gold prices ticked higher initially prior to giving up those gains and weakness has continued in London trading this morning.

European stocks stabilised after Asian stocks fell today in line with weak U.S. markets as equities investors were spooked by a vicious selloff in sovereign bonds globally and a very large U.S. trade deficit. The disappointing U.S. trade data for March painted an even bleaker economic picture of the first quarter and led to the dollar and stocks coming under pressure.

The sudden spike in bond yields is being mirrored by an equally rapid rally in resources. This means investors globally are becoming less concerned about the risk of deflation and more concerned about the risk of inflation or stagflation.

Oil prices rose again today and are 15% above their recent lows. Prices are holding near their 2015 highs, continuing a month-long rally that was supported by renewed weakness in the dollar and a disruption to oil supplies from Libya.


Gold in U.S. Dollars – 5 Years

Volumes in the global spot gold market have fallen to their lowest in a year, with shrinking liquidity and a slowdown in interbank trade making customers reluctant to transact on a large scale

As the first week of May draws to a close, Reuters reports that “sales of gold American Eagle coins by the U.S. Mint have had a relatively soft start to the month, with 4,500 oz of coins sold so far (April’s total was 29,500 oz, down by a third from March). Silver Eagle coins have totalled 783,500 oz.

In Europe in late morning trading gold bullion was flat at $1,192.44 an ounce. Silver was down 0.6 percent at $16.51 an ounce and platinum fell 0.1 percent at $1,146 an ounce.

Important Guide: 7 Key Gold Must Haves

This update can be found on the GoldCore blog here.

Mark O'Byrne

Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in