Gold and Silver Higher After China Launches Shanghai Gold Exchange.
The Shanghai Gold Exchange consists of Chinese banks, jewelers, miners and the local units of Standard Chartered Plc and Australia & New Zealand Banking Group Ltd. This is considered to be a huge move by the Chinese to show their strength as the worlds largest producer of gold. They are hoping to boost their power in the fx markets as well as the global gold markets.
David Marsh as quoted by the official China Daily, Managing Director and Co-Founder of Official Monetary and Financial Institutions Forum (OMFIM),
“The yuan-denominated gold benchmark offered by SGE is a necessary addition to the international gold market and should make the pricing of physical gold more open to the play of actual market forces.”
The PBOC says,
“The Shanghai gold benchmark will provide a fair and tradable yuan-denominated gold fix price … will help improve yuan pricing mechanism and promote internationalisation of the Chinese gold market,” Pan Gongsheng, deputy governor of the People’s Bank of China said at the launch in Shanghai.
“The Chinese gold market has rare opportunities for development,” Gongsheng said. “The market capacity and potential are huge. Today’s event will help enhance the impact of the Renminbi on gold pricing.”
What Does the Shanghai Gold Exchange Mean for You and I?
This could be the beginning of the end of the outright rigging of the gold and silver markets that the gold community has been screaming from the rooftops for years. It also could mean that there is just another player in the market that can fix prices to the detriment of those who invest in gold. One thing we know for sure is that the early signs are promising.
The process of ending the manipulation will not take a month or two it may take years but at least the process has begun. I am going to stay on the positive side of the spectrum and hope that we will see gold return to its proper role in the monetary system. Who knows we may soon see China back the Renmimbi with gold and truly turn the monetary system on its head while sending the value of gold to the moon.
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