Yuan Gold Trading In Hong Kong On 'Triple Demand' ?- China Positioning CNY As Reserve Currency

Tyler Durden's picture

From GoldCore

Yuan Gold Trading in Hong Kong on 'Triple Demand' ‎- China Positioning CNY as Reserve Currency

Gold is trading at USD 1,686.70, EUR 1,218.80, GBP 1,069.29, JPY 130,327.94, AUD 1,634.84 and CHF 1,506.12 per ounce.

Gold’s London AM fix this morning was USD 1,689.00, GBP 1,069.33 and EUR 1,217.65 per ounce. 

Yesterday’s AM fix was USD 1,676.00, GBP 1,062.31 and EUR 1,214.31 per ounce.

Cross Currency Table including Yuan (CNY)

Gold has broken through resistance at $1,690 and may challenge the $1,700 level after last week’s biggest weekly gain since early September. Many investors remain nervous that contagion in the euro zone may not be averted ahead of the European Union debt crisis summit this weekend.

Gold in USD – 30 Day (Tick)

CFTC data shows that hedge fund managers, large speculators and gold and silver traders increased their net-long position in New York gold and silver futures. Speculative positioning in the market remains at very low levels after sharp liquidation which suggests gold may have bottomed and should rise from these levels.

Hong Kong, the world's third-largest gold trading centre, has become the world's first place to offer gold trading in yuan, further positioning the yuan or renminbi as a potential global reserve currency. 

Hong Kong’s Chinese Gold & Silver Exchange Society, a century old bullion bourse, has introduced gold trading quoted in Chinese yuan, making it more convenient for Chinese people and high net worth individuals (HNWs) holding yuan to invest in the precious metal and opening a new way to hedge. 

Gold in CNY (Yuan / Renminbi) – 1 Year (Daily)

The move comes amid the continuing push by Chinese authorities for a more international role for its currency and as an alternate reserve currency to the embattled dollar and euro. 

With gold now traded in yuan, it is only a matter of time before oil is traded in yuan thereby positioning the yuan as ‘petro yuan’ and a rival to the petrodollar’s status as the global reserve currency.

The move reinforces Hong Kong’s status as an offshore hub for the Chinese currency and as a rival to New York, London and other cities as a global financial capital.

The Chinese Gold & Silver Exchange said that the service, dubbed "Renminbi Kilobar Gold," is targeting retail and institutional investors. The product is among the latest offerings designed to tap the fast-growing pool of yuan deposits within Hong Kong banking system.

"By attracting both local and international investors, the Renminbi Kilobar Gold is a significant step towards internationalizing the renminbi," said Haywood Cheung, president of CGSE.

From inception the contract may generate a very significant HK$6 billion ($770 million) in trades a day, exchange President Haywood Cheung said in an October 14 interview. Daily bullion trading volume at the bourse, which has 171 active members, has surged to HK$136 billion this year from last year’s HK$31 billion on appetite for gold as a safe haven.

“There’s triple demand for this yuan product,” said Cheung late Friday. “Investors can enjoy the bull market in gold, the yuan’s appreciation and hedge gold denominated in other currencies against the yuan.”

“The uncertainties in the global economy are supporting gold”, Cheung said. 

“It’s still the right timing,” Cheung said. “With the depreciation of the dollar and problems in the Eurozone, investors realize they want some other currencies that are safer like the renminbi. Gold can be a way for people to bet on the yuan, even it’s not yet fully convertible.”

The society, started in 1910, will consider trading silver in the Chinese currency later, Cheung said, declining to identify the timeframe. The society has imposed a daily ceiling of 300 kilos for physical delivery of gold denominated in yuan to avoid depleting the currency pool in Hong Kong, he said.

“The sudden influx into gold bars may take away half of the yuan liquidity in Hong Kong,” Cheung said.

Should even a small amount of traders of the new yuan denominated gold contract attempt to take delivery of physical gold bars it may create supply issues in a marketplace that is already experiencing supply constraints.

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Silver is trading at $32.28/oz, €23.39/oz and £20.50/oz 

Platinum is trading at $1,571.70/oz, palladium at $627/oz and rhodium at $1,525/oz.

(Sunday Morning Herald)
Gold steady as investors await Europe deal

Hong Kong Starts Trading Gold in Yuan to Tap 'Triple Demand'‎

India gold seen extending gains into 3rd week

(The Times of India)
Gold coins in demand, jewellery loses sheen

10 Essential Fiscal Charts Demonstrating America's Disastrous Condition

Financial repression means long-term inflation, steadily rising gold, Rickards says

(The Gold Standard Institute)
The Gold Standard Institute on the Utah Monetary Declaration

(Wall Street Journal)
Will India’s Gold Fever Hit New Highs?

John Mauldin: Can "It" (Hyperinflation) Happen Here?

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PaperBear's picture

The Hong Kong Gold Exchange has involvement of the Rothschilds so we know it is f**ked as a price discovery mechanism. What about the Pan Asian Gold Exchange ? We will get proper price discovery from PAGE.

GetZeeGold's picture


Try to buy real gold.....you'll quickly find out what it's worth.



dclaz's picture

Just 3.7% above spot price for minted bullion here in Australia? And that's only 1oz bars.

eaglefalcon's picture

just returned from a trip to shanghai, china.  

at the coin dealer the price for 1oz gold bullion coin is rmb12,300 or $1,930; price for 1oz silver bullion coin is rmb413 or $64.84.

banks offer gold bars at around $1,900, and no silver bars

had a chat with the woman at the coin shop and asked her why the bullion coins were priced so much above spot, she said their company sets the price monthly and simply ignores what's going on in the future market.  They'd lose big money if their price is determined by spot.


the coin shop was full of customers, mostly buying gold, it appears that very few people were interested in silver except for some collector/memorial coins.  


You can absolutely not buy physical silver unless you are willing to pay double the spot price


Saxxon's picture

Good report Eaglefalcon - I brought a roll of SAEs to a Beijing auction house and a Zhengzhou coin dealer last month - not interested in foreign coins - did not even make me an offer - did you see any non-Chinese mintage in Shanghai?

Additionally, did you see the coin commercials on TV and the captive audience loops in the PBOC lobbies hawking G and S coins?

eaglefalcon's picture

regarding non-chinese coins, China Gold Coin (the official dealer of the Chinese mint) sells a set of 4 foreign silver coins (1oz american eagle, maple leave, austrian philharmonic and mexican libertad??) for rmb2,000 or $314, apparently the coins are sold as novelty/collection items.  this is what i know about silver market there:


1.  the general public is not very interested in physical silver either because it occupies too much space or because it's too expensive compared to spot price, most silver investors trade paper silver

2.  the banks and coin shops will buy back gold panda coins and bank-issued gold bars at spot, but none of them will buy silver back.  part of reason:  it's much easier to fake silver than gold, at $30-40 it doesn't make sense to test silver bullions.

3.  having said the above, there is one exception, physical silver and platinum are traded at huatong see this http://www.ex-silver.com/  and this http://yinbaojie.com/,  they will buy silver at close to spot price, however, it has to be a standard bullion bar minted by one of the members of this bourse

4. I guess at this point, the chinese coin dealers are still too afraid to buy your sae because most of them have never seen one

TGR's picture

The high premiums are because there is a 17% VAT on bullion in China. Traders avoid the VAT by settling for physical at the exchange.

eaglefalcon's picture

i doubt VAT is the reason for high premium.  The premium for gold is high but still less than 17%.  So if the coin shops have to pay VAT to the government, they'd be selling for a loss.  Remember most of their business is gold, not silver.  banks sell gold bars at lower premium than coin shops.  In essense, gold bullions are treated as investment rather than comsumer item (like jewelry, to which VAT is applicable)


it might be possible that coin shops simply want to make a bigger profit, and they are free to do so because they are a state monopoly

TGR's picture

I should reprhase then: what appeared to be a high premium when you priced your gold was made up of spot + a small markup for the dealer + the 17% VAT. Even the banks in China charge you the 17% VAT. Actually the banks will quote you very close to spot, but then must add the 17% VAT.

The coin shops can, and do, indeed take as much profit as they can get, should someone be willing to pay. But nearly all authorized dealers have the spot price in RMB/gram in ticker-tape displays above their counters, so its hard for them to get away with it. You can though, barter the price to some degree, but at best you'll only get it some 17.5%-18% above spot.

This is why mainland Chinese love their gold shopping in Hong Kong, as there is no VAT.


eaglefalcon's picture

I've bought gold coins from chinese coin shops and gold bars from banks, in each case the price is much higher than spot but much lower than spot + 17% VAT.  Thats why I believe the VAT doesn't apply to gold.  Furthermore, if you buy anything in China, the price the seller quotes is always the final price including any tax.  Therefore it's almost unthinkable for someone to quote a price without taking VAT into account, and then add 17% when the customer is ready to pay, that'll absolutely shock the buyer beyond belief. 



TGR's picture

You are mistaken. There is 100% a 17% VAT on bullion in China. I live here. I've bought from ICBC, and have been to numerous gold outlets across China over the years. I normally buy in HK or overseas though, simply to avoid the VAT.

i think you need to do another trip, learn some Mandarin, or do some research - you got something lost in translation while you qere quoting.

eaglefalcon's picture

on wednesday, october 12, 2011, I bought a few 1oz gold pandas at China Gold Coin on Changshou Rd, Shanghai, China.  I paid rmb 12,310 for each coin.  


Now, on that day, rmb 12,310 was worth $1,932, spot gold price was $1,680, therefore I paid a 15% premium for the coins.  Consider the fact that official bullion coin is always 3-5% more expensive than unofficial bars, the premium they charged was around 12%, much less than the 19% vat you have suggested

I bought 50g and 100g bars from icbc before, the premiums were even less 

I Fought In Nam's picture

It sounds like they are selling gold & silver ounces at their real values and ignoring what the manipulated monex says they are. The times they are changing.

trav7777's picture

if you think the markets HERE are bad, just take a look at the Chinese.  Why the hell do you people think the Chinese are honest?  LOL. 

The yuan a reserve currency?  HAHHAHAHAHA...there's nobody who would or should trust that toilet paper at the rate China is stuffed with bad loans and bogus debt, nevermind the capital investment behind that paper, buildings that fall down, airplanes that crash, and highspeed rail that is stolen, cloned, then turned into a complete loss.

Panafrican Funktron Robot's picture


nyse's picture

My thoughts exactly.

broke433's picture

Bs, I don't get why people think gold is a hedge vs euro crisis, it tanked along with the Euro on Merkel's comments.

aleph0's picture

... aka  broke401k .


Sudden Debt's picture

because banks are dumping the paper derivatives to any fool who wants to buy them.

That's why I suspect the paper silver price to dip below 25$ before march and than It's time to look for fools who are willing to sell at that price.


Raymond Reason's picture

Well, it seems like the biggest fools are the govt mints and the mines that sell to them.  That's the real reason why we can't decouple from the paper price.  I've never understood why a mine would sell physical bullion for a paper price??  Something seems amiss, afoot, alas. 

knukles's picture

Don't confuse cause and effect.  Her comments happened to be made contemporaneous with the London a.m. daily pre-fix market shit stomping after the Asian run up over night.  

Mesquite's picture

Au $1,685/Oz = "tanked"...??

Wow, I didn't know they'd legalised that stuff already..

(I used to smoke it also..)

Oh regional Indian's picture

If only people knew the real truth about the price movements and demand drivers of gold.

It's all about the drug trade, well documented for over a century and a half.

All this chartology would be completely redundant!



Hobbleknee's picture

Never heard of the correlation. Please explain.

falak pema's picture

Whatever the hidden slant in this rant it has no substantiation except innuendo and 'name dropping' to smear all in the UK and the zionist/liberal lobby in the US; which latter I cannot comment on as I was not there in US in those days. I am not an Empire lover, far from it. But there are better ways to fight the sellers of shoddy Empire credo than to descend into the gutter to disseminate rumors of this calibre. Typical isolationist US paranoid BS this is.

This guy makes every known UK author into a Kim Philpby type for the ugly cause of King and opium.


Oh regional Indian's picture

Wow Falak, the speed reading title of th eworld goes to you. You read, digested and judged such a deeply researched and written booklet in 20 minutes flat?

Either that or you are, for once being vapid and reactionary.


falak pema's picture

no Ori, not reactionary, but labelling all these people including some great minds who fought for anti colonialism, like Bertrand Russel, as Imperial shills, is so broad brush. This man La Roche prints a lot on the Net. So his reasoning and mind set is heavy printed and repetitive. I don't buy his ideology slant line, its not a process with checks and balances, its deterministic in its logic and hegemonic in its reasoning. He wants to get from point A to point B and he is prepared to steam roller his way. Very Bolshevik in its methodology. I am not a Leninist or Stalinist. Nor Maoist. Am not convinced by a deterministic mind set. FOr whatever ideology. I cannot buy into a reasoning that has no place for doubt and for alternatives. We are human in our judgements not Gods. His style is character assassination. You don't need to read a document in detail with such a heavy slant to see the wood from the trees. 

trav7777's picture

you predicted an all-out crash for today as dictated by the stars and shit...have the planets realigned?

Oh regional Indian's picture

Day is not done yet, in fact, it's barely begun, right?

Let the day be done, then we'll see.


qussl3's picture

If China took the place of the US as the final consumer and ran a perpetual trade deficit, who here truly believes that the RMB would be a "hard" fiat?

The RMB as a reserve currency is completely ridiculous.

Worse than having the fox guard the coop.

Raging Debate's picture

Quss. The Chinese peg was 40 years in the making and is a FEATURE not a bug. But I had just commented about the big gaps in confidence. By gaps I mean years. The cultures are not harmonized. Ultimately, nations are still opportunists.

And continued strangling of the American rape victim more is now going to have uncontainable consequences. The ME countries don't have time to adjust to a rapid change in security arrangements either. I could make a long lists of huge risks.

You play this by buying Yuan now and waiting for the final devaluation of the dollar in 2013. Yuan will spike massive first year or so. Two Yuan to a Dollar. Then use Yuan to buy cheap RE.

This is the classic method of trading mandraking of the boom/bust cycle and new major reserve currency. But careful staying in past 2015. Many geopolitical risks past this point...

qussl3's picture

Why is everyone so sure of RMB appreciation?

To assume China wants a strong RMB and have it replace the USD as the reserve currrency would imply China becomes the consumer of last resort and globocop.

2 problems with that, China CANNOT be self sufficient in energy or water, and the wealth distribtution there is completely bonkers.

The US consumer is indebted, and the FED's actions are attempting to place the cost of soft default on their final creditors ie overseas holders of USD denominated debt.

Whether China has successful hollowed out the US manufacturing base is still debatable.

If the US can get the politcians to point in the same direction I think the US still holds most of the cards.

China wants a strong dollar for much longer than we think as that gives them time to further exploit the current dynamics to secure energy, metals and water.

They stockpile now because they lack the reach for now to police colonies.

If the USD crashes its the FED's doing not China.

Snidley Whipsnae's picture

q3... "The RMB as a reserve currency is completely ridiculous."

The dollar as a reserve currency is toast so the world needs a replacement. Not suggesting the RMB is the right one but a new currency must be chosen... and, the new currency needs a commodities reference to avoid the pit falls of the dollar as a reserve currency; ie, excessive printing.

qussl3's picture

I completely agree, the Dollar is BS, but its entrenched, very much so.

The EUR and SDR are ahead of the RMB in that line.

Heck i wouldnt be surprised if the Yen has a larger reserve allocation among CBs compared to RMB.

The Yen is undergoing structural deflation and the BOJ is playing a pretty good pantomine of not printing - so far.

Conrad Murray's picture

When Scrooge McDuck goes for a dip in the vault, this is what he listens too - http://bit.ly/p2GNkL

falak pema's picture

As I posted earlier under TD's article on 'headfake'  :

China now promoting the CNU as reserve currency. The BRIC 'gold bug' train is now leaving Hong Kong Gold exchange on its way to Istanbul and Brussels.

EL INDIO's picture

There will never be proper pricing until paper trading stops.


RagnarDanneskjold's picture

This comes as Shanghai is discussing kicking retail investors out of the silver market. They're talking about banning those with under 100k yuan or over the age of 50.

Raging Debate's picture

The China peg will work for awhile and it appears the schedule for it has been moved up by a couple years. It takes time to build confidence in a new host currency. I think the gaps in confidence are too large avoid social unrest (happening now) which will be directed into world war. I wish all people of the world well.

But don't ask me or my sons to sign up for the coming East/Wes war to clean up the 'loose ends' where containment fails. Thiis is YOUR mandraking party Central Bankers/CFR's. You ARE accountible for the damages if the risk goes bad. That is what happens when the Get Out of Jail Free card is used early.

Snidley Whipsnae's picture

"But don't ask me or my sons to sign up for the coming East/Wes war to clean up the 'loose ends' where containment fails."

raging debate... Had to laugh at your comment although I agree with your stance.

Fact is, your sons will not have time to walk to the recruiting station or receive a draft notice because a real WW3 will be over in a few minutes.

Not that it will do any good but you and family can try the old 'duck and cover' routine...and, don't look at the brilliant flashes.

Personally, I hope I am near enough to a ground zero to avoid living in the aftermath... that is, if it happens.

Raging Debate's picture

Snidley, that occurance of nukes would be at the end of a conventional conflict. Nuking all of us off the planet isn't going to happen. But I wager that 35% globally would die between war casualties and especially the breakdown of society.

I know people that say the same thing that they wouldnt want to live in the aftermath but the weapons systems are a lot different than 30 years ago. In some areas, electricity will be restored a year afterward. I am not saying the rebuilding effort will be fun I am telling you if you have to eat bugs, leaves and sawdust bread for a year then be mentally prepared to do it. The high time coming after 2021 will be worth surviving for.

Snidley Whipsnae's picture

Raging Debate... "Snidley, that occurance of nukes would be at the end of a conventional conflict. Nuking all of us off the planet isn't going to happen."

Pure conjecture on your part. After the first shots are fired in a war NO ONE knows what will happen. The 'fog of war' is pervasive and no one, not even the commander in chiefs, know what will happen next. I will tell you one thing I am certain of: If a country has nukes and are losing a conventional conflict there is a very high probablility that the nukes will be used.

I'm curious... Have you ever been in a war? I mean, real involvement where real bullets are being fired at you and you are firing back?

"But I wager that 35% globally would die between war casualties and especially the breakdown of society."

A simple breakdown in global trade would probably wipe out more than 35% of the world's population... even if no war ensued.

"I am not saying the rebuilding effort will be fun I am telling you if you have to eat bugs, leaves and sawdust bread for a year then be mentally prepared to do it. The high time coming after 2021 will be worth surviving for."

More conjecture on your part but I admire your determination to survive and see what is on the other side. To each his own... I have had a great life and prefer to enjoy my memories of the world as it is today and yesterday... and not memories and everyday experiences of a nuke war world. But, I wish you all the best with your rebuilding efforts and hope that once is enough.



disabledvet's picture

Odd to quote Karl Marx relative to success in Capitalism but to me "it's all about the means of production." in other words "what are you exchanging your gold for?" until there is an actual gold standard why the phuck should anyone care? The answer of course is they shouldn't.

Ag1761's picture

good for my stack of pandas

PulauHantu29's picture

RMB Yuan backed by gold or gold and silver is a possibility even though you can't eat the stuff.  Maybe that's why the Indians and Chinese have been buying like crazy.

qussl3's picture

China may trumpet huge gold reserves but they arent ever going to have that gold  redeemable in RMB, they will print as much as policy dictates and depending whether they runa surplus or not, look to export inflation.

China has a history with paper money, and none of them lasted particularly long.

Pure fiat is an aberration enabled by cheap energy, while it is not impossible to we are making a fundamental transition, i wouldnt bet on it.

Raging Debate's picture

Yes, the lag in energy production for EU, US and PRoC for steady organix growth is at least five or six years.