How the Chinese Market ACTUALLY Works
How the Chinese Market ACTUALLY Works
Frankly, this is a disgrace and a scandal, and shows that the Chinese auction methodology is far more transparent that its London counterpart.
The Chinese will at some stage call time-out when ready, and allow the Shanghai Gold Price Benchmark to really shift up a gear to generate physical gold prices that will disconnect from the COMEX and LBMA pass the parcel shenanigans.
Last Friday we got horrifying (from a contrarian standpoint) COT numbers with nearly record numbers for commercial shorts. With history as any guide, gold and silver should have already been slaughtered, yet they have not been. In fact, we now have silver and gold at nearly one year highs and mining equities exploding.
Commercials are very short gold and silver now, and they have lost $billions just today. Maybe they continue to throw paper at gold and silver, Shanghai ain’t buyin’ it! No matter what the apologists say, COMEX can and will default when they can no longer deliver metal.
This is the rally you NEVER sell…
It seems the Shanghai Gold Exchange (SGE) is continuing to publish the amount of gold bars withdrawn from the vaults on a monthly basis. For the month of January “SGE withdrawals” accounted for 225 tonnes, down 1 % from December. After the first weekly SGE reports in 2016 did not disclose SGE withdrawal data and phone calls to the bourse in Shanghai answered these numbers would not be published anymore we can wonder why the Chinese have changed their stance.
The Shanghai International Gold Exchange has suddenly come to life…
Withdrawals from the vaults of the Shanghai Gold Exchange (SGE)accounted for an incredible 70 metric tonnes in week 2 of 2015 (12 – 16 January) .
Aggregated withdrawals in the first two weeks of this year already stand at 131 tonnes:
The pattern of central bank covering the debt is clear. The lesson is that central banks can apply paper patches to the failed banks, and buy more time, then repeat the process on the next failed bank event. No limit to their bank patches seems to be in force. The banker cabal can continue endlessly since their patches are based on paper solutions, fiat paper money spew, and they control the paper output. They are the masters of the House of Paper.
The paper mache solutions can continue in a seemingly endless manner, but not in the Gold market.
The intervention and suppression in the Gold market is finite. It requires Gold bullion, the physical ingot bars, in order to execute the perpetuated interference and alteration to this financial niche market.
The manipulation is finite, and it is coming to an end.
When the Shanghai shock comes, ALL THE PAPER GOLD STRUCTURES WILL FALL, all the FOREX derivatives will collapse, & all the control rooms will go into panic mode.
Withdrawals from the Shanghai Gold Exchange (SGE) came in very strong in week 51 at 61 tonnes, year to date the counter has reached 2016 tonnes!
As the manipulated paper price of silver heads lower, so are the silver inventories as the Shanghai Futures Exchange. The silver stocks hit an all-time low today as the price of silver trades in the $17 range. At the peak, the Shanghai Futures Exchange held 1,143 metric tons of silver. However, today only 7% of that record amount remains.
As we can see from the chart below, silver inventories declined from a high of 575 mt (metric tons) in February, to a low of 81 mt today.
The Death Of The Indian Gold Market Has Been Greatly Exaggerated!
Trade statistics for the month of August have just been released in India, showing a huge surge in gold imports compared to August of 2013.
Meanwhile, the Chinese government backed Shanghai Gold Exchange (SGE) brought forward the launch date of its international gold trading platform which is hosted in the city’s free trade zone (FTZ). The gold trading platform will be known as the ‘international board’.
In a surprise announcement, the SGE said today that the international board will go-live today September 18, eleven days ahead of its original launch date of Monday September 29.
While the mainstream would have you believe otherwise, Chinese (wholesale) gold demand is still trending upward.
The SGE chairman, Xu Luode, confirmed this last week at the LBMA forum in Singapore.
According to the latest numbers figures by the Hong Kong Census and Statistics Department, China has imported less gold in May.
Gold futures in Shanghai are currently being traded at a discount to the international London gold price.
This development suggests Chinese demand has cooled down somewhat from the 2013 high.
Last year Chinese bank imported a total of 1.158,15 tonnes of gold through Hong Kong, when the price of the yellow metal dropped the most in more than three decades.
The answer is, we don’t know. And we don’t know because we can’t know. Reuters ran a story this morning which asserted that China’s gold imports had dropped to a 16-month low in May. But the truth is, we don’t know what China’s total imports in May were.
There have been several reports and commentaries which suggest that China’s demand for gold is declining this year.
The conclusion is that the gold is headed for another down-leg.
Seemingly, the current action in the gold market is contradicting the premise that gold is headed lower…
If I were U.S. policy-makers, I would be worried about the reasons China has decided to go “cloak and dagger” on their gold imports…
At this moment there are 12 banks that can import gold into China.
These banks have a PBOC license to import gold, though for every shipment they need a new approval.
Before approval the gold is “parked out of China…and only transferred and shipped into China when needed”, – which should be interpreted as only shipped into China when PBOC approval is granted.
In the past years most gold that entered China mainland came in through Hong Kong. Why? Because Hong Kong was the parking spot for gold outside of China before it was allowed to be imported.
This will soon change as the Shanghai FTZ will take over this role.
China National Gold Group Corporation or China Gold, China’s largest gold conglomerate with primary interests in mining and also refining, is on the hunt for global acquisitions and partnerships, the company’s president said yesterday.
Mr. Song said that his company is searching for opportunities in the gold and silver markets. “The growing strategy is very clear: We are going out looking at things globally,” he said through an interpreter. “We have a few opportunities, at different stages.”
For 53 years the Chinese people were banned from owning gold.
But that all changed in 2003, and now the enormous demand by 1.3 billion Chinese over the last ten years is causing an important paradigm shift, as gold and silver moves from the West to the East.
The ramifications of that paradigm shift have yet to be appreciated.
Chinese gold demand in the past few weeks is not as strong as in the beginning of 2014 or as in 2013 after the price of gold crashed in April, though the levels are slightly higher as they were throughout 2011 and 2012.
On the Shanghai Futures Exchange (SHFE) all silver futures contracts came out of backwardation this past week (week 24), and on June 13, most Shanghai silver premiums over international price closed under 6 %.
The prior week they all closed above 6 %.
The scarcity of silver in Shanghai appears to be easing.
Silver remains scarce in Shanghai, premiums for spot silver this week have been above 6 percent over the international price and some contracts on the Shanghai Futures Exchange (SHFE) are still trading in backwardation.
On June 6, when the SHFE closed, the bid price for the first delivery month silver contract, which expires on June 16, was ¥ 4058 yuan. The ask price for the December contract was ¥ 4053 yuan.
This means that when you own physical silver, or can get your hands on any, you can sell it in June and at the same time buy it back in December for less money.
Silver delivered in June trades over a premium to silver delivered in December, which emphasizes spot demand.
Normally precious metals trade in contango; future prices being higher than spot.
Most people on this planet who have an interest in gold simply copy the demand numbers from the WGC. The consequences of the world being misinformed on this subject is hard to comprehend.
The WGC mentions SGE deliveries and withdrawals in two separate reports. If they watch SGE withdrawals why not publish these numbers and inform the world on the significance of these numbers?
This is essential information regarding the Chinese gold market.
Why is the WGC reluctant to cover these essentials?
They sell…we buy.
Ancient Chinese secret…
As we can see power shifting from West to East on a daily basis at the current time of writing, in the fourth quarter of this year the Shanghai Gold Exchange (SGE) will launch an international board in the Shanghai Free Trade Zone (FTZ) for investors worldwide to trade gold spot contracts denominated in renminbi.
The purpose is not only becoming the world’s primary physical gold market but also to increase pricing power and internationalize the renminbi.
The SGE international board will be another blow to the US dollar hegemony, as more people around the world will hold and use the renminbi for trading gold.