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China Holds “Gold Congress” - Positioning Itself As Global Gold Hub, “In China, Gold Is Money”
China Gold Congress in Beijing
The China Gold Congress is currently in full flight in Beijing. The three day Congress is China’s biggest gold industry event of the year, drawing in participants from across the Chinese and international gold sectors including central banks, mining companies, bullion banks and refiners.
The event, co-sponsored by the World Gold Council (WGC) and the China Gold Association, showcases China’s gold industry and acts as a focus point for what is now the world’s largest gold market in terms of demand and product innovation.
Discussions and forums during the event cover everything from reserve asset management for the official or central banking sector, through to investment products and mining supply. One of the key themes this year is the internationalisation of the gold market.
China’s gold market accounts for one third of global demand, and according to the WGC, is expected to grow another 20% cumulatively from now until the end of 2017.
In what is still a very centrally planned economy despite many market related reforms, nearly all reported gold activities in China flow through the Shanghai Gold Exchange (SGE) in one form or another.
Both the China Gold Association and the Shanghai Gold Exchange were established with government backing and their growth and success reflect a very deliberate pro-gold strategy on the part of the Chinese Government.
Even though the China Gold Association is a non-for-profit member association, it still primarily acts as a conduit and coordination group between the government and the gold producers.
The Shanghai Gold Exchange is the government’s second central hub in China’s gold market.
SGE approved refiners take in production from China’s fragmented gold mining industry and in imports from Hong Kong and other countries.
The gold then flows through the Exchange after which SGE deliveries flow out to the banking sector, the official government sector, and additionally to the jewellery and technology industries.
The development of the Shanghai Futures Exchange also provides an additional venue for hedging and gold price discovery.
In China gold is money and is accepted as such by the general population.
There really does not seem to be a debate about this in Chinese government circles, and another part of the government’s strategy has been to advocate the increased innovative usage of gold by the Chinese banking sector.
This is quite a simple strategy for the government to implement since the four big Chinese commercial banks and many other Chinese banks are state-controlled.
Gold is now used widely in the banking sector in structured products, as gold collateral, and in gold leasing. The presence of the Chinese bullion banks in the market via the Shanghai Gold Exchange (SGE) provides the necessary liquidity that is turning the Exchange into a world player on the global gold market.
For example, the large Chinese banks such as Industrial and Commercial Bank of China (ICBC), Bank of China and Agricultural bank of China all offer gold accumulation plans to the investing public and the WGC estimates that these products currently represent between 100 and 200 tonnes of gold. The large banks are also active in gold trading on a proprietary basis via the SGE.
Earlier this year, ICBC via its purchase of some of Standard Bank of South Africa’s assets had been rumoured to be interested in buying a seat on the London gold fixing panel when Deutsche Bank left the panel, but a buyer of this seat never materialised.
ICBC is not yet a market making member of the London Bullion Market Association (LBMA), which would be a prerequisite to becoming part of the gold fixing panel, but given that the Chinese gold market is beginning to overtake that of London in terms of physical flows and probably price formation, there may not be a need for ICBC to bother being such an active participant in the London market as gold business continues to migrate to the East.
The Chinese government is also responsible for granting gold import licenses to international bullion banks and has supported the establishment of the Shanghai free trade zone where a gold trading platform has been set up for international banks and trading houses.
In fact, in an announcement that coincides with the China Gold Congress today, the Shanghai Gold Exchange just announced that it is launching an internationally tradable yuan denominated physical gold contracts to be traded in the free trade zone for the popular retail 1kg gold bar, the Good Delivery 12.5kg (400 oz) bar popular with central banks, and a smaller 100 gram bar contract.
The US based CME Group that runs the Comex gold futures exchange also appears to have used this week’s China Gold Congress to announce the launch of their competitor product in the form of a 1kg gold contract to be traded in Hong Kong.
With increased regulatory scrutiny on the London gold and silver fixings and what looks like a defensive attempt by the LBMA in London to protect their proprietary gold and silver price discovery auctions via the recently introduced CME/Thomson platform for silver and probably soon to be introduced similar CME platform for gold, it will be interesting to see how the Chinese government’s pro-gold strategy pans out.
We may soon see global gold hub wars between London and New York on the one hand and the increasingly powerful eastern hubs of Singapore, Shanghai and Beijing on the other.
MARKET UPDATE
Today’s AM fix was USD 1,247.00, EUR 964.20 and GBP 767.53 per ounce.
Yesterday’s AM fix was USD 1,254.25, EUR 968.46 and GBP 779.91 per ounce.
Gold fell $6.50 or 0.52% to $1,250.00 per ounce and silver slipped $0.11 or 0.58% to $18.98 per ounce yesterday.
Gold in Euros - 2 Years (Thomson Reuters)
The gold price traded in a narrow range overnight in Asia, ending trading in Singapore at $1,247. Further weakness in London trading saw the price slip marginally to $1,240 which is considered a relatively strong support level. Gold is down 0.72% compared to yesterday’s New York closing price.
In London trading today silver weakened further to $18.70 and is 1.63% lower relative to yesterday’s midday London fixing.
Platinum weakened again today by 0.58% to $1,377 while profit taking in palladium continued as it fell 0.95% to $848.
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Actually, your question answers itself. Any such tendency, although no such policy of not delivering on foreign held contracts has been anounced, or is likely, would constitute a semi-corner on physical and a consequent upward pressure on prices, worldwide; not just in China.
because there will come a point where china does allow gold to leave the country, but only at the point where it is repriced to compensate for its worthless $US holdings
So their gold is priced at $20,000 USD per oz are you going to give up your gold ship it China to get that money?
that depends on the degree to which the Aussie $ has become toilet paper in conjunction with the greenback.
Bingo.
Harvey knows war is in the mix as well. But yes, your opinion has merit.
bitterwolf: Europe an N.America did not gain the wealth created over the last 30+ years because a metal of any type, was "money".
Wealth? You mean debt, right?
Semantics are a waste of time...
In China gold is money and is accepted as such by the general population.
Therein is the issue....they totally do not trust their own currency...but dont mind USD.
Europe an N.America did not gain the wealth created over the last 30+ years because a metal of any type, was "money".
Gold bugs and bugs of any type...bug off.
Cheers
Of course not, that wealth was created the good old-fashioned way, by the exploitation of labor. Labor creates wealth, gold just stores it.
They have busted it below support; which anyone who has been in this sector in the past 3-10 years should have absolutely expected. I bought USLV today, flat on the position so far.
For what it's worth, I agree with your timing. it's not worth much; I'm wrong quite often. If this isn't the major multi-year low; it's as close as nevermind; IMHO.
I hold long positions and have no intent to sell, but I don't think the downward trajectory is over yet. Wouldn't surprise me to see us break $1,000 before this is over; CME is a shell game played with Monopoly money. Let the gold flow to stronger and stronger hands, which includes the international banks who will be holding physical when the music stops and the SDR reigns supreme.
You might want to read the website for BullionVault.com; it's on Google. They sell real vaulted silver on an independent market, where you can sell it again. they explain the whole thing on the website. they're for real. you might feel better about owning real bullion in a vault instead of SLV, whatever.
"Gold is now used widely in the banking sector in structured products, as gold collateral, and in gold leasing."
So much for the hope of a legitmate price discovery mechanism. Once this shit takes hold, the Shanghai Exchange will be no better than the Comex.
Also, this whole thing reads like a press release from the ChiComs.
Give Mr. Organ credit for standing behind his predictions. Be interesting to see if it doesn't pan out. I assume he'll be honest enough to come out and admit it...? Although I must say, that after about 10 attempts of the former CNN reporter to 'tabloid' Organ into concrete dates & times, the interview became quite annoying. He does this frequently however to other guests as well. Must be something in the 'get-a-scoop' DNA that attracts these types to journalism.
I give Greg Hunter a lot of credit for trying to hold people to an explanation when they make big claims. He did the same thing with Sinclair when he predicted 50k gold. But I agree with you, what Harvey was laying out there was really interesting but this is the same guy who said the COMEX would default in June. He says a lot...
And as always, after alll is said and done; a lot more was said than done. "Those who know don't speak; those who speak, don't know" Ancient Chinese wisdom.
Unless some heads roll, banksters will always use gold to hypothecate and scam people.
I vote for bankster heads rolling!!! Can I vote twice and also register a couple hundred million dead people to vote too since it was banksters who caused their deaths???? ;-)
they would use their own mother to hypothecate
Isnt that what they have been doing the last year or more with the -700 in price.? What a scam
They can try until the gold runs out. If "some folks" are right after all the COMEX will fail to deliver at a carefully plotted date. You can only run the Ponzi if fresh money keeps coming in.
China has a long and troubled history with silver and Western powers. I think it has not been forgotten.
www.usawatchdog.com. watch Harvy Organs take on this.
Thanks for the link. I try not to miss Harvey. But JFC, that guy interviewing him is AWFUL. He asks the same fucking question over and over. And that's after he uses the pre-interview to steal his guests' thunder. It's amost un-listenable.
Greg Hunter kept asking the same question because Organ wouldn't provide a straight answer.
For a question like:
"When will the price manipulation of gold and silver end?"
The answer should be a date, in the form of "XX/XX/XXXX."
Not stories about the time he testified in front of Congress, or the how many years his website has been running, or how his friend's friend's friend is Kevin Bacon's mail carrier.
It took nearly half the interview for Hunter to finally get Organ to provide a concrete date: By the end of the year.
Well to ask for exact timing is not so smart, unless you talk to some of the few insiders that know when when is, and chances are, GH will never get to interview one of them, and if he did, he would surely NOT get the right answer. So let the big guessing game continue, for entertainment purposes. Chances are, it will happen, sometimes, some day when people will expect it least, or some major black swan hits (.eg ww3, or comex default as Harvey suggests). Maybe Harvey will be proven right, maybe not. Time will tell when.
Things can almost always go on well beyond their projected expiration date. Harvey is correct in his analysis but putting a date tp things is merely a guess. Funny he did not mention the Swiss referendum (Nov 30) which has a huge potential to totally erase the credibility of central banks in the gold arena.
If the swiss vote yes on for their gold repatriation, I suspect the media will go completely dark on it and related events unfolding in Switzerland. I also suspect that their parliament will take an unprecedented long time in enforcement. A yes vote in Switzerland will be a stake through the central bankers' hearts but it could take months or even years to unfold.
Harvey has been studying these markets for years. Much of what he says stands with logic; something that is absent in a rigged and fraudulent scheme. So date of collapse? I think he is probably right regarding China proxy buying of COMEX paper.
He is essentially predicting that when they are ready they will stand for delivery and that will collapse the scam. Makes sense to me.
Like FOFOA and Another and FOA and more and more people way smarter than me have said. "You will wake up one morning and the BID price will be met with no OFFER. And the prices will be what the market finally determines is the cost of all this debt folly"
Sinclair/FOFOA I think both did an analysis at $55K or so to balance out some portion of the printed toilet paper. But that number I think would also reflect $100 loaves of bread."
Beyond me all this anyway. Just keep buying my little teensy oz. Just because I believe logic will eventually prevail.
Whack
I'm with you in general but I don't think there's ever going to be a physical default on the Comex because we know who will be short, the investment banks/funds. In such a case the Fed will loan them as much physical as they need to deliver and if that's 100 tonnes, no problem, because they've got more than a few hundred tonnes.
But the cat will be out of the bag with any problems of delivering so that might be the start of of something big even if there's no actual default on delivery obligations.
All of this will be spun so as to 'keep the integreity of the Exchange' which as everyone knows will be a sick joke.
The FED will not loan out to Comex 100s of tonnes, just so that Comex can deliver 100s of tonnes to China.
Say what you will about Nixon closing the gold window, but he did that because the US made a decision to not let any more physical leave the country. Yesterday the US defaulted on the gold window, today the US defaulted on delivering to Germany. Tomorrow the US will let Comex default.
Yes the system is broken, but it has been practically official US policy to not deliver any more physical for 40 years.
Unfortunatley Whacko - the behavior of financial markets resonating with basic logic does not prove out.... Never has, and never will likely. Same as it ever was - only worse... As we've witnessed, "eventually" can be long, long time...