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China Launching “Global Gold Exchange” In Shanghai
Today’s AM fix was USD 1,283.00, EUR 940.48 and GBP 762.87 per ounce.
Yesterday, U.S. & UK markets were closed yesterday for a national holiday.
Friday’s AM fix was USD 1,292.00, EUR 948.61 and GBP 767.18 per ounce.

Gold in U.S. Dollars, Daily, 6 Months - (Thomson Reuters)
Gold is testing the lower level of support of the unusually tight range seen in recent days between $1,284/oz and $1,306/oz. Below that the next level of support is at $1,250/oz and below that the low seen on December 31st at $1,190/oz. Overnight, gold in Singapore gradually traded lower from a high of $1,293/oz to a low of $1,282.81/oz.
The price weakness comes despite continuing bullish developments for the gold market. These include geopolitical risk as Ukraine lurches into a civil war, tensions between Vietnam and China in the Far East and China’s push to make Shanghai a “Global Gold Exchange.”
Ukraine launched air strikes and a paratrooper assault against pro-Russian rebels who seized an airport on Monday. Its newly elected leader rejected any talks with "terrorists" and said a robust military campaign in the east should be able to put down a separatist revolt in "a matter of hours".
Even as the fighting was getting under way, Poroshenko held a news conference in Kiev and said that the government's military offensive needed to be "quicker and more effective".
A Vietnamese fishing vessel capsized in disputed waters in the South China Sea on Monday after "harassing and colliding" with a Chinese fishing boat, the official Xinhua news agency said on Tuesday.
China has approached foreign banks and gold producers to participate in a global gold exchange in Shanghai, as the world's top producer and importer of gold seeks greater influence over pricing and the global gold market.

Shanghai Gold Exchange - China Foreign Exchange Trade System
The Shanghai Gold Exchange got the go ahead from the central bank last week to launch a global trading platform in the city's pilot free trade zone. SGE is looking to launch physical contracts of gold, silver and platinum group metals denominated in Chinese yuan on the international exchange.
According to Reuters:
“For gold, they are looking to launch three yuan-denominated physical contracts, of 100 grams, 1 kg and the bigger London good delivery bar weighing 12.5 kg.
Beijing's plans to open up gold trading comes at a time when the benchmark price-setting process for precious metals is under scrutiny. Barclays Plc became the first bank to be fined over manipulation of the 95-year-old benchmark London gold market daily "fix" last week.
State-backed SGE has asked bullion banks such as HSBC , Australia and New Zealand Banking Group (ANZ), Standard Bank, Standard Chartered and Bank of Nova Scotia to take part in the global trading platform, two people approached by the exchange said.
SGE, the world's biggest physical gold exchange, where domestic banks, miners and retailers buy and sell gold, could also open up the international platform to foreign brokerages and gold producers, they said.
"China wants to have more voice in gold prices," said Jiang Shu, an analyst with Industrial Bank, one of 12 banks allowed to import gold into China. "The international exchange is the first step towards gaining a say in gold pricing."
"If you don't allow foreign players to participate in your market actively, or do not push Chinese financial institutions to participate in the international market, then China's strong gold demand is only a number, not a power," he said.
HSBC and Standard Bank declined to comment, while the other banks and SGE were not immediately available for comment.
The global platform will first host spot physical contracts for gold and other precious metals, before aiming to launch derivatives down the line, said a third source who is directly involved in the launch of the international exchange.
"We are not just encouraging foreign banks but also producers and other entities," added the source.
China, the world's biggest buyer of raw materials from copper to coal, is pushing hard to establish pricing benchmarks for a number of commodities.
Gold, along with oil, could be among the first to be opened up to foreign players. The free trade zone in Shanghai is set to see international energy trading by hosting the country's first crude oil futures.
Contract specifications for silver, platinum and palladium were also being discussed, though the sources said specifications and participants had not yet been finalized. The exchange is expected to be launched by the fourth quarter.
Even if China lures foreign players, the exchange would still need to see full convertibility of the yuan and enough liquidity on the exchange before it can be considered to operate on a par with other hubs.
Currently, the London gold "fix" is the benchmark for spot prices, while New York's COMEX contract sets the futures' benchmark. SGE prices are tracked to gauge Chinese demand as reflected in premiums or discounts to spot rates.
Earlier this year, China's ICBC - in conjunction with its acquisition target Standard Bank - indicated interest in buying Deutsche Bank's seat on the London gold fix but it is not interested anymore, sources previously told Reuters.
The influx of gold has made SGE the biggest physical exchange, with a turnover of 10,000 tonnes for its immediate and deferred delivery contracts, according to Thomson Reuters GFMS.
The Shanghai Futures Exchange has the world's second-most traded gold futures contract, though trading is largely limited to the domestic market with volumes of about 41,176 tonnes last year, still well behind COMEX's 147,083 tonnes.
The SGE's international board and the main exchange could eventually be merged when the yuan is fully convertible, Albert Cheng, managing director of the World Gold Council's far east region, said.
"That would become a very important exchange in the world, and Shanghai will truly become one of the three international gold centres after New York and London," he said. "No doubt, the participation in the international market is the key effort of the SGE and the current administration."
Read the full story here.
Conclusion
Banks, global producers, refineries and mints will be hesitant to embrace the new Chinese exchange, especially in the short term. However, once the new exchange achieves critical mass in China and Asia, the exchange will be embraced by western institutions and could become the most important gold exchange in the world.
The move will challenge the dominance of New York and London as global precious metal hubs, as centres of the gold trade. It will also challenge their influence on pricing. Physical demand provides underlying support to gold prices and ultimately dictates the price. Speculative trading and manipulation can and has affected prices in the short term.
With China's push for an international physical exchange, physical demand will begin to have a stronger influence, thereby ending gold manipulation. This will allow gold to rise to a more appropriate price given the scale of macroeconomic, systemic, geo-political and monetary risks of today.
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several years ago in my comment I suggested set up a physical gold exchange away from comex. Only traders who have physical gold can trade, no leverage, no naked short, no margin. Sad china used this idea now not US.
"And here is a song request going out to the Petro$."
"Slip Slidin' Away"
SIMON & GARFUNKEL
We're watching the death of the Petro-dollar and our reserve currency status...right in front of our faces.
Yeah, I read it, but you know what pisses me off? The constant referral to Ukrainians who don't support the Junta in Kiev as "Pro Russian rebels". WTF. Any source, and that includes this one, that perpetuates the MSM slander against the people in Ukraine who don't support the government in Kiev are terrorists, doesn't deserve to be taken seriously.
REUTERS REUTERS REUTERS
There is nothing more fun than watching central bankers/governments involved in a Keynesian and mercantile bun fight to control the worlds economy. Devalue their currency's to out export their neighbors but at the same time not devalue so much that they can't import strategic commodities and goods. Of course the commodity exporting countries are making counter moves.
Meanwhile the butterflies fart, chaos occurs, and turkeys drop from the sky spreading blood and guts everywhere........"unexpectedly."
Go long on popcorn, vodka, and ammunition
"Gold is testing the lower level of support of the unusually tight range seen in recent days between $1,284/oz and $1,306/oz. Below that the next level of support is at $1,250/oz and below that the low seen on December 31st at $1,190/oz. Overnight, gold in Singapore gradually traded lower from a high of $1,293/oz to a low of $1,282.81/oz."
BEARS - completely ignorant of, and oblivious to, fundamentals...are EVERYWHERE!
Instead, why not...
"Gold is testing the HIGHER level of support of an unusually tight range seen in recent days between $1,284/oz and $1,306/oz. ABOVE that the next level of resistance is at $1,453.25...
This chart-drive, wave-driven, technical down, down, down shit is self-fulfilling disinformation.
You can't fight city hall, so why look a gift horse in the mouth?
REUTERS gave everyone a public heads-up before gold broke its 1280 support line.
Margin on GC is cheap! A good trade would have been to Sell GC, 1278 STOP for entry. Then have OCO bracket: BUY 1280.1 STOP, and BUY 1270.1 LIMIT.
If HSBC is involved, then the monkey business most likely will continue.
This is another piece to the puzzle; another nail in the coffin to dollar hegemony. First the oil, the gold, and then the land grab. Bye bye worthless FRN.
100 gram contract ? ? WTF ???? I don't get it. Retail >??????? Mom and Pop? kindergarten graduation present ? ?
What a piker! ~3-ozt contracts levered the same as COMEX would require less than $300 USD margin, and a $4 K account could stand for delivery. China uses SI units for commerce.
I would venture the guess that it is a contract designed to be delivered upon.
hard money. so it begins
Since the amount of physical gold available to trade is very small (most of what comes from the mines is spoken for) I suspect the Chinese feel a need to be involved in the manipulation. They certainly do not want a strong Yuan yet.
Those who believe that this will lead to a gold bull market are going to be disappointed.
The communist gold exchange.
Awesome!!! How do I deposit everything I own in this???
Do communists steal others money or is it just "murder the millions" business only that they partake in??
Time to get your head out of the 1950s. China is an authoritarian hyper-capitalist economy. Nothing commual about it.
"Time to get your head out of the 1950s"
Tiananmen Square 1989
Guantanamo 10 years and counting....sounds hyper communist. NSA dragnet spying on the Universe....even Stalin and Hitler didn't dream that far! Bitches! look in the friggin' mirror!
That was 25 Years ago and China did not murder millions.
Of course the USA has murdered millions of people in that time frame, including the 500,000 Iraqi INFANTS and CHILDREN during the 1990s.
What a National Socialist!!!
What a National Socialist!!!
Who me? You don't know me very well.
(you should see a doctor about that jerking knee)
The death of one man is a tragedy, the death of millions is a statistic. Joseph Stalin.
That's your argument.
China is still a one party state, whatever they call it.
Same as America!!!
A state-owned one party state, at that.
ALL decisions are political/financial in nature.
Gold broke out of a flag pattern lower and a low close opens up further losses. Possibly 1200 or even 1000. People can manipulate something in the short run but if gold was truly undervalued, the market would've overpowered sellers long ago.
yup...gold derivitives are losing value. The metal is not going to be shipped out of the USA to take advantage of higher Chinese prices (watch what happens if that begins.) This is China doing something for the Yuan and perhaps for the future. It won't change anything unless something BIG happens. Maybe this is the beginning of that BIG thing however.
Happening on the silver front as well.
Shanghai Gold Exchange silver now trading at a 5.7% premium to London.
They announced the termination of the LBMA Silver Fix because this is becoming a physical market and the paper games are nearing an end.
The real phsyical markets will take over the trading: Dubai, Shanghai, Instanbul, Mumbai, Singapore, Moscow, etc.
This will do nothing for gold. No efforts in the past to remove the stranglehold of the COMEX have ever brought any improvements. None. Ever. The COMEX laughs at these feeble attempts. $1/2b smackdowns are now routine and the beatings will continue until morale improves.
PS Don't anyone dare to try and "investigate" this either. Or else.
You have it backwards. There is no Gold manipulation. Gold does not move, the only manipulation is the dollar. Shorting Gold is a way to prop-up the USD against the entire commodity complex.
The reason Shanghai wants to trade Gold before liberalization of the Yuan is that it enables the PBoC to anchor the Yuan and it disables teh ability of the West to attach or manipulate the Yuan.
Having a physical exchange of Gold in Shanghai is anchoring Yuan and enables PoBC to get the Yuan outside of the clutches of the US manipulators. PoBC can keep some control of its currency by having it traded against Gold actively. If you only have USD/Yuan, who controls USD can manipulate Yuan by proxy. If you have USD/Yuan but next you have Gold/Yuan, Petro/Yuan etc... it is much much harder to launch speculative attacks against teh Yuan because you also need to repress physical gold, physical crude etc...etc...
Wait you say there is no gold manipulation yet they short gold????
I mean it sounds like you know what you are talking about, maybe you can put it in more layman terms for us newbies, would like to learn.
I can see someone manipulating the currency of a smaller to medium sized nation, but a country as big as China is not so easy especially when they manufacture so much stuff so its only natural that their currency would be in demand around the world vs say the pound which is pretty much worthless in my opinion since they make no consumer goods, but only attraction for the pound is from the oligarchs who launder their theft through the British Pound Laundromat
The Americans and the Chinese are printing money. The Chinese are doing so because their products are permeating around the world turning up in every country, thus their economy is growing and they can print to make more currency to take into account the increase in demand for Chinese currency via their products.
The USA is printing because its the reserve currency and it can get aways with soaking the world with dollars. Now neither currency is fixed to gold so the moment that happens we can get a better idea of the true value of that currency relative to something tangible.
There must be an independent index that takes some real GDP numbers/and gold resources not those put out by govt institutions and divides them by the amount of money in circulation.
I mean maybe do several different indices, some based only on gold and other precious metals that the country has in reserves, maybe one based just on oil and gas reserves, etc, something that is a commodity that country can provide for sale to the world if someone wants to purchase something with their currency. Then we can get a better idea of what a dollar is relative to other currencies.
I do suspect that we will never know the true amount of money being printed by any country since its in their interest to hide the true extent of their devaluation of their money. I mean with those paper bogus dollars you can go down to South America and buy some real nice ranch land. Just ask George Bush about it.
We need to go back to a real metal standard, and it can be several metals, gold, silver, copper etc. Make the coins into some metal that has value, be it copper or nickel, or silver, or gold for higher denominations. Until that happens this fiat currency is the greatest THEFT perpetrated on the citizens of the world.
http://www.coinflation.com/
this was an interesting site showing value of metal in coins...
The worldwide demand and chase for gold shows that everyone is fed up with fiat currency and does not trust it. The Americans are playing this game with paper gold contracts where they can print up a bunch and we never know if they really have that much gold in their vaults. Basically its fraud on a wide scale since they are lying about how much gold they have yet they keep these gold certificates trading around and around to depress their price so that when the idiot comes off the street and sells his jewelry, the system can rip him off by giving him the least amount of dollars possible.
When the next realignment of currencies happens in the future, those who have the gold win, it has been that way since the beginning of man, civilization after civilization, and nothing is going to change it. GOLD IS KING.
Finally, a central meeting place for us barbarians, and to think they wanted to keep us out.
So, will the U.S. be exchanging crude for Yuan? I think not. Everything, priced in gold, will get more expensive.
"Everything, priced in gold, will get more expensive."
you'll need tweezers to pick up those tiny gold coins if that ever happens.
or you'll be trading with paper that someone says is backed by gold.
How'd that work out the last time?
Terrible news - gold down $25/oz.
Exchange of Yuan for gold and petrogold resurrection will clearly mean that gold demand will drop, says the COMEX.
All that China and Russia have to do to end the manipulation is to demand payment for their commodity exports (including gas) to Europe in gold. The rest will work through very quickly. The fact that they haven't done that yet means they don't want it to end.
Problem is that when they make that decision we won't know about it, so if you aren't holding phys gold at that time then the only option available to you will be paper gold, which will work only until it doesn't. Be prepared to ride this one down all the way to the bottom. It will rise like a meteorite when the PTB decide the time is right.
If there is a second reserve currency then there has to be a means to trade or exchange one for the other. That will work for a while but eventually we will be back to gold. There is no other way...
The only way I can see this working is if every nation maintains a zero balance of trade with every other nation. Otherwise, gold will accumulate in those nations that run a trade surplus until trade deficit nations run out of gold, after which trade grinds to a halt.
To avoid that, the surplus nations would have to lend gold to deficit nations, or stop trading with them. So, how is that any different than the current arrangement where deficit nations have to acquire dollars, or borrow them from surplus nations in order to trade? In the end it's just an accounting unit. Without trade, money has no real value, regardless of what its made from.
I think it's more likely we'll see something like the old Soviet Comecon system evolve between major trading nations. I think that's what you're seeing now between Russia and China. If I sell you oil, and you sell me manufactured goods, than the only issue is how we establish relative value. As long as you deliver the goods, it's relatively unimportant what accounting units we use.
Breaking away from the dollar is a good idea because the US prints them in excess to the detriment of everyone else that uses them for trade, but you won't stop that by going to gold. Bilateral balanced trade is the only workable solution and that still runs into the problem that many nations have nothing of value to trade with, thus no way to acquire whatever unit of exchange is being used.
We're in for some hard times in the years ahead, especially the peripheral nations with weak economies. Those will either become client states (if they have something we need) or be left to fend for themselves as the biltaeral trade blocks go up.
If you're living in a trade block nation, you'll be OK, at least food and energy wise. The rest of the world could get really nasty though. Something to think about if you're set on "bugging out" somewhere.