China Aims To Be "Major Gold Trading Center" With Interbank Gold Trading

Tyler Durden's picture

From GoldCore

China Aims To Be "Major Gold Trading Center" With Interbank Gold Trading

Today's AM fix was USD 1,580.00, EUR 1,287.06, and GBP 1,009.33 per ounce.
Yesterday’s AM fix was USD 1,579.50, EUR 1,288.65 and GBP 1,012.57 per ounce.

Silver is trading at $27.55/oz, €22.51/oz and £17.54/oz. Platinum is trading at $1,429.20/oz, palladium at $580.80/oz and rhodium at $1,190/oz.

Gold dropped $4.40 or 0.28% in New York yesterday and closed at $1,577.70/oz. Gold investors in Asia bought on the dip pushing gold over $1,580/oz to $1,584/oz, then it dropped off and hovers at $1,580/oz at the open of European trading.

World Gold Reserves (Bloomberg)

Gold has gained this morning after two straight days of Bernanke testimony related slight losses and gold is testing resistance at the 50-day moving average at $1,586/oz.

US economic data showed the job market is still slow and the results of groundbreaking on new US homes rose in June at its fastest pace in the last 3 years, which saw risk appetite increase.

Today US unemployment claims are at 1230 and existing home sales at 1400.

Yesterday’s comments from German Chancellor Angela Merkel sent the euro down and reignited Eurozone fears. "We have not yet shaped the European project so that we can be sure that everything will turn out well, we still have work to do," Merkel was quoted in a media report as saying. Spanish bond yields are hovering near 7% again.

The German chancellor also reiterated her belief that the euro will survive, saying she was "optimistic that we will succeed."

UBS have warned of the risk of hyperinflation in the UK and U.S.

China has proposed to broaden trading of precious metals in its local market in order to help China become a "major gold trading centre" (see News).

The Wall Street Journal was briefed about China's plans by "a person involved with the matter." The paper reports that "the move could increase liquidity and help Beijing gain stronger pricing power for key commodities like gold".

China is the largest consumer and now the largest producer of gold in the world and has aspirations to become a major gold trading center on a par with London and New York. China is also the fifth largest holder of gold reserves in the world after the U.S., Germany, France, Italy (see table).

Chinese officials have spoken of China’s aspirations to have gold reserves as large as the U.S. in order to help position the yuan or renminbi as a global reserve currency. Indeed, it would be only natural for China to aspire to have their currency become the global reserve currency in the long term.

In the longer term, being a major gold trading center would make China a more powerful financial and economic player and indeed could allow them to influence commodity and other important market prices. Indeed, Reuters reported that becoming a major gold trading center "would boost the country's clout in setting global prices".

The journal reports that “Beijing's tight grip on commodities trading and rigid capital controls are among the obstacles in the way.”

The move is also part of the broader financial reforms that Beijing has launched in recent weeks, loosening some of the restrictions on securities investment and allowing banks to price loans at cheaper rates than in the past, that seek to grant market forces a bigger role in both the economy and the capital market.

The moved proposed by market officials would expand trading of precious metals from designated exchanges to the country's vast interbank market, according to the person involved. The Shanghai Gold Exchange has released draft rules for such interbank precious metals trading, which will include spot, forward and swap contracts for the commodities, said the person.

At the moment, producers, consumers and investors can trade only spot and futures contracts in gold and silver on the Shanghai Gold Exchange and the Shanghai Futures Exchange, respectively.

Due to limited membership on the two exchanges, many investors, including banks, aren't able to directly trade the precious metals on the exchanges.

The draft rules were jointly developed by the Shanghai Gold Exchange, which is the world's biggest marketplace for spot gold trading, and the China Foreign Exchange Trading System, a central bank subsidiary that oversees onshore currency trading.

According to the draft rules, the authorities are aiming to launch the interbank trading on Aug. 31, starting with gold contracts, said the person.

That would make gold the first commodity to trade on the interbank market.

The authorities will introduce a "market maker" system for the planned precious metals trading—the first time the system will be used to trade a commodity on the interbank market—with transactions done on an over-the-counter basis as compared to the exchange-based pricing mechanism.

Market makers are firms that stand ready to buy and sell a product at a publicly quoted price to facilitate trade.

An over-the-counter market would allow investors, in this case banks, to trade in large quantities that far exceed the Shanghai Gold Exchange's current trading volumes, analysts said.

According to the draft rules, banks are allowed to use the new precious metals contracts in the interbank market for proprietary trading only.

The Shanghai Gold Exchange is inviting banks, mostly members of the exchange, to submit applications to take part in the trading, said the person, who expects most major and midsize banks to participate.

The move to let banks become market makers also shows the authorities' desire to give such better-established and more sophisticated institutions more power in setting prices for major commodities, a common practice in developed markets, said Jiang Shu, senior precious metals analyst at Industrial Bank Co.

Current restrictions and capital controls remain an obstacle to China becoming major gold trading center and to the renminbi becoming an accepted global reserve currency.

The move by China to expand precious metals trading to their growingly important and vast interbank market is important and another step towards China becoming an economic power on the world stage and one that will rival European nations and the U.S.

Cross Currency Table – (Bloomberg)

(Bloomberg) -- Crop Surge Sends Soybeans to Record as U.S. Drought Intensifies
Crop prices surged, with soybeans rising to a record, as the worst U.S. drought since 1956 scorched fields and raised chances of higher food prices.

Soybeans climbed as high as $16.445 a bushel today on the Chicago Board of Trade, surpassing the previous peak of $16.3675 on July 3, 2008. Corn rallied to the highest since 2008, trading within 1 percent of its all-time high, and wheat surged above $9 a bushel to the highest in almost four years.

The U.S. has declared almost 1,300 counties in 29 states as natural-disaster areas because of the drought. Corn and soybean fields are in the worst shape since 1988, a year when drought slashed the U.S. corn output by 31 percent, U.S. Department of Agriculture data show. The USDA cut its estimate for this year’s corn harvest by 12 percent on July 11, saying production may reach 12.97 billion bushels. The agency had projected record output of 14.79 billion bushels in June.

“There is not going to be enough supply to go around,” said Richard Feltes, the vice president of research at R.J. O’Brien & Associates in Chicago. “The U.S. drought is laying the groundwork for higher food inflation into 2013.”

(Bloomberg) -- Silver ETP Holdings Jump to Highest Since May 2011
Holdings in exchange-traded products backed by silver jumped 141.09 metric tons, or 0.8 percent, to 17,886.48 tons, data tracked by Bloomberg showed. That’s the biggest gain since Jan. 19 and the highest level since May 4, 2011.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

China Aims to Become Major Gold Trading Center – Wall Street Journal

Gold edges up on weak dollar, still lacks direction - Reuters

Reuters Poll: 2012 gold price forecasts cut further but still bullish - Reuters

Gold last hope for Sudan to prevent economic collapse – Financial Post

Deutsche Bank, HSBC Traders Investigated In Libor Probe - Bloomberg

Brodsky On Gold, 'Credit Money', And Real Return Investing – Zero Hedge

UBS: The Risk Of Hyperinflation Is Largest In The US And The UK – Business Insider

Taylor: Faith in gold as the ultimate money - Mineweb

Rule - The Physical Silver Market Is Getting Dangerously Tight - King World News

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LULZBank's picture

Gold Bitchezz!!!

GetZeeGold's picture



Crap.....Chinese barbarians!


BaBaBouy's picture

China will Wrestle Control (Manip) out of the hands of Ben Shalom ...


GOLD Standard is back, Soveriegn DEBT is crumbling, the writing is on the wall.


GOLD to $50K, Real MONEY, Bitchies...

Vincent Vega's picture

U.S. Gold Reserves are just like UFO's.....people claim they exist but as of yet no one has proof they exist.

GetZeeGold's picture



We've placed an ad for someone to do an audit......turns out no one in the US needs a job.


engineertheeconomy's picture

Notice the new hunderd dollar bill has a little gold pot and gold letters, does that hint at something...

d edwards's picture

New Golden Rule: he who controls the gold trade makes the rules?

N. B. Forrest's picture

So looks like a great arbitrage trade until the US manipulators are finally broken. 


My hopes of the manipulators being broken are very long suffering, but this might finally be the answer. 

post turtle saver's picture

I guess the US makes the rules then.

LongBalls's picture

I've said it once....I'll say it again. We are most likely not returning to a gold standard. But gold will be included in the new financial reset. Significant collateral reserve? I presume so.

TheFourthStooge-ing's picture


We are most likely not returning to a gold standard. But gold will be included in the new financial reset.

It will certainly grease the wheels of dollar-exclusionary international trade.

reader2010's picture

But the Chinese believe buying apartment is the only sure way to long. But gold can be used to wipe ass tho.

GetZeeGold's picture



They build one actually buys them.


500 more ghost cities coming online.....they'll cut you a deal.....uber cheap! Your payment will only be excepted in gold however.


Zero Debt's picture

It is believed in the top Beijing leadership that the ghosts ("gui") will buy all the properties will hell money. These are the "hungry real estate ghosts" who never could afford a property in their lifetime and are now returning to seek revenge, slamming doors and windows, blinking lights frenetically and shouting in the staircases, waiting for a kind real estate agent to show them a discount condo.

JustObserving's picture

China has $150 trillion worth of apartments.  That is enough to buy all the gold in the world 30 times over.  Maybe, some of the smarter Chinese will diversify into gold.

Peter Pan's picture

$150 trillion worth of apartments? Maybe so, but who is going to buy them? And who is going to move there if they are from Europe, the UK or USA?

The Chinese may be patient, hard working and strategic but their love affir with real estate has turned out to be as stupid and painful as the rest of the world's.

N. B. Forrest's picture

I'd say more stupid and more painful


LULZBank's picture


But gold can be used to wipe ass tho.

And its reusable, unlike paper fiat.

achmachat's picture

you need three golden seashells for that

GetZeeGold's picture



And its reusable, unlike paper fiat.


Go ahead and burn that when you're done.....cause I don't want it back.



LULZBank's picture

You might have a rethink when it goes to $10'000/Oz.

LawsofPhysics's picture

They want to be able to continue to manipulate their currency too, therein lays the rub.

TideFighter's picture

Anybody check Blythe's Linkedin page to multiple Chins?

debtor of last resort's picture

So we will have more gold in the world....


paper pimps


Jason T's picture

The US has run a little under $8 trillion in trade deficits since 1974  .... and we're running about a $500 billion annual trade deficit this year.  Thank you Baby Boomers. 

GetZeeGold's picture



Thank you Baby Boomers.


It's more like screw you Baby Boomers.....we just killed your grandkids. They now work for the company store.


DosZap's picture

The US has run a little under $8 trillion in trade deficits since 1974  .... and we're running about a $500 billion annual trade deficit this year.  Thank you Baby Boomers

If you were old enough to have a clue, you would know the boomers are the one's that LOST their ass when the manufacturing facilities closed here and offshored.

The NWO gang, and our Gov pushed corporations to do so by allowing cheap imported crap into the country,without any tariffs or taxes.

We were after all, going to MOVE on up, and be the technical and electronics innovators for the world par excellance.

And we no longer needed those sh78ty Blue collar jobs.

There you go.

When that started I was a young man, and I knew they were killing us then, and no one in Gov did one damned thing to stop it,on the contrary they pushed it.

NWO plans..........wake up dude.

Peter Pan's picture

Without an audit to prove otherwise, it may well be that China has more gold than the USA.

ON a per capita basis China is still way behind many many nations in gold ownership, but when it comes to pushing your weight around the world it's not averages that matter but gross values and China is certainly building some big gross values.



GetZeeGold's picture



Without an audit to prove otherwise


Maybe China will do an audit......but in the USA that is totally out of the question.


q99x2's picture

Yep. The banksters on behalf of NWO are simply taking down the sovereign nations like they did Argentina and buying up their infrastructure for pennies before the move to integrate them into a new gold backed monetary system.

Nice plan unless you are 1 of 7 billion humans that aren't of the elite class.

Kokulakai's picture

Without an audit to prove otherwise


Audit hell; more like a hand of liars poker.


aleph0's picture

@Tyler ...that "World Gold Reserves (Bloomberg)" Table .....  YoY increase in Gold holdings... shows Russia 9.68% and China 0%.

What gives ? ... is that right ?

Snidley Whipsnae's picture

China accumulates gold in various soverign wealth funds prior to transfer to the Central bank/banks of China. China announces a new total of gold reserves every few years when this transfer takes place...

At least, that is what they have been doing in the past.

As far as real totals of gold held by various soverigns it is anybodys guess. Since Western central banks have for generations used real gold to suppress the paper price of gold.

We do not know how much gold is held by any soverign unless we want to take their word for it... I don't.

MFL8240's picture

If China can rid the world of the crime syndication that is manipulating Gold, they will own the entire market.  The Chicago sewer will disapear as it should given the deception, manipulation and margin games it has played.

Freegolder's picture

Inviting HSBC to help run their futures market does not look like they are moving in the right direction though does it? Just gives HSBC the chance to create more paper gold in China.



engineertheeconomy's picture

Between HSBC and JPM, both selling naked shorts like theres no tomorrow, the global central bankers can drive the price of Gold down to new lows in order to facilitate their accumulation without devaluing their currencies. Anyone holding their paper will be left holding the bag, because  eventualy there will be a seperation between the artificially low suppressed paper price and actual physical price drivin by the market. 

oldgasII's picture

All the gold in California
Is sitting in a bank in old Shanghai
In somebody else's name..

Downtoolong's picture

China a more powerful financial and economic player…allow them to influence commodity and other important market prices.

AKA, central control and manipulation of prices and wealth transfer. That’s what it’s all about nowadays, isn’t it? I’m not sure anymore whether China is taking its cue from the U.S. or we are adopting their philosophy of a centrally planned economy for ourselves. The end goals and basic practices of money and wealth capture, particularly for a chosen few, seem to be the same either  way. As long as the little guy is left out of the picture any way, other than look Muppet, it’s our way or the highway, who cares?

topshelfstuff's picture


And something important to add and put together. This has been kept so well hidden (off the front page Headline where it should be) London's LME...Yes, the 135 year old London Metals Exchange was just taken over by Hong Kong/China, about a month ago. I think many are still unaware. I don't recall seeing a deserved big write-up on it.

This is Major. The LME has been a key Money Maker for the few...having the Power to make and Change the Rules. Example, and some may remember how the LME made Nickel crash via a Blatant Rule Change in 2007, when Nickel has pierced the $50K per ton mark.....this link gives the story and a demonstration of the Profits that were garnered by those who controlled the LME:

LME is the world's largest exchange trading nonferrous metals, including copper and aluminum, while HKEx is the world's biggest exchange operator by market value.

HONG KONG - The Hong Kong stock exchange said Friday it had entered into an agreement to buy the London Metal Exchange (LME) for a total of £1.39 billion (S$2.75 billion). Hong Kong Exchanges and Clearing (HKEx) said its bid for the 135-year-old LME Holdings would allow it to "develop its own commodity offering and to diversify its revenue sources". "The acquisition of LME Holdings represents a unique opportunity for us to acquire in one stroke a position of global leadership in the commodities market," HKEx Chief Executive Charles Li said in a statement.

Hong Kong Exchanges' Bid For LME Will Give China More Power In ...

Jun 19, 2012 – Hong Kong outbid major players like NYSE Euronext, the CME Group, and especially the ICE to buy the LME, one of the last member-owned

6/19/2012 Hong Kong Exchanges' Bid For LME Will Give China More Power In Global Commodity Trading

Last week’s bid by the Hong Kong Exchanges (HKE) for the London Metal Exchange (LME) flew under the radar, but its underlying importance is paramount.

Silver Stock Report: LME steals Nickel in Broad Daylight!

Jun 7, 2007 – Nickel tumbles after LME changes rules · Nickel Falls to 10-Week Low After London Exchange Changes Rules I almost can't believe that nickel ...

Nickel Falls to 10-Week Low After London Exchange Changes Rules

I almost can't believe that nickel investors let these institutional crooks get away with thatIt's not a 'rule change', it's theft! 

They are actually stealing the nickel owned by wise investors who have wisely predicted the price rise, and wisely planned to hold nickel in advance. 

Broomer's picture

I have more nickel in my old cupronickel coins than those clowns ever had in their possession. Serves them well, you know how storage behaves when the shit hits the fan: what is mine is mine and what is yours is mine.

Freegold's picture

What´s all the fuzz about a "commodity"? It pays no dividend, Buffet said so!

Silvertrader's picture

There is some good money to be made in trading silver imho.

JJSF's picture

Andrew Maguire was part of some mission to open a "Pan Asian Gold Exchange" that would give gold traders a system somewhat outside of the bullion banking stranglehold but they shot it down. Here is what he's doing now..looks good.. Gold Trading with Andrew Maguire looks good.