Sprott Money Contact Form
 

Thank you for contacting Sprott Money.  We will respond to you within 1 business day.

 

Sincerely,


The Sprott Money Team


Sprott Money Ltd.
111 Queen St. East
Suite 501
Toronto, Ontario M5C 1S2
Canada

[t] 1.888.861.0775
[f] 416.861.9855
sales@sprottmoney.com
www.sprottmoney.com

Administrative office only - no walk-in sales.

 

Please Try Again After Some Time...
Please enter valid captcha
Name*
Email*
Comments*
Loading Image

Toll Free: 1-888-861-0775; Local: 416-861-0775

Swipe to the left

China Flexes Muscles At Shanghai Gold Exchange - Jeff Nielson

China Flexes Muscles At Shanghai Gold Exchange - Jeff Nielson
By Jeff Nielson 2 years ago 13002 Views 16 comments

Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.



January 13, 2016

The New Cold War between West and East has already become a Luke-Warm War , and it threatens to become a full-fledged “hot” war. After years of passively reacting to Western crime and aggression; both China and Russia have shown an increasing tendency to adopt a more proactive stance. On the economic front, China has leaped into the international gold market, suddenly and decisively .

After having purchased no gold on the open market for at least six years; China’s government has now made large, open market purchases of gold every month , for six, consecutive months. This has already totaled roughly 100 tonnes. Ultimately, this is gold which comes out of the warehouses of the Big Bank crime syndicate.

Of equal significance; China is funding these open market purchases with the proceeds from dumping large quantities of its U.S. Treasuries holdings. U.S. Treasuries are worthless paper, available in near-infinite quantities. Gold, as the ultimate monetary metal, is literally “priceless” in comparison to that worthless paper – while its supply is extremely limited. Selling the former in order to buy the latter may not be the banksters’ worst nightmare, but it’s close.

However; China’s open market purchases of gold are not the only example of China “flexing its muscles” in the gold market. Domestically, China has sought to steadily increase the role of the Shanghai Gold Exchange in the global gold market. It is morphing from being a mere alternative to the paper-fraud markets of London and New York into being a serious rival.

In mid-2014; China announced plans to begin offering three “physical” contracts for gold at the SGE, denominated in renminbi, in amounts of 100 g, 1 kg, and 12.5 kg. The significance of the last, larger number is that this equals the size/denomination of the “London good delivery bars” which are (supposedly) being traded in the Western world.

When we see contracts for the trading of a physical commodity labeled as “physical” contracts, isn’t this redundant? No. Rather, the clear implication is that the “physical” trading of gold at the SGE would be in contrast to the paper trading that takes place in the Western world – where more than 100 “ounces” of paper-called-gold exist for every ounce of actual metal in those fraud markets.

China further stipulated that it was “inviting” Western financial institutions to take part in the trading of these physical contracts. A Reuters article provides the thinking behind sending out such invitations:

“China wants to have more voice in gold prices,” said Jiang Shu, an analyst with Industrial Bank, one of 12 banks allowed to import gold into China. “The international exchange is the first step towards gaining a say in gold pricing.”

“If you don’t allow foreign players to participate in your market actively, or do not push Chinese financial institutions to participate in the international market, then China’s strong gold demand is only a number, not a power,” he said.

The implication is clear: international participation in trading at the SGE enhances the prestige and (perceived) legitimacy of the Exchange, and thus accelerates its rise in status vis-à-vis the exchanges in London and New York. For this reason, it will likely not be a surprise to many readers that Western financial institutions have been less-than-enthusiastic about such participation.

For newer readers, who are not yet familiar with the “role” of Western banks in the West’s ultra-fraudulent bullion markets, it’s really quite simple. These Big Banks are the “hit men” in these markets, who perennially prevent price-discovery (and thus legitimate prices) in global bullion markets, through a variety of forms of illegal manipulation .

One of their favorite methods of market-rigging is through “shorting” these markets, with massive, illegal trading, where the illegality could not be more obvious. How obvious? In 1971; the Hunt Brothers were convicted of “cornering the silver market”, at a time when their total holdings represented less than 20% of available inventories.

Today, the four Big Shorts in the silver market, all Western Big Banks, have “cornered” roughly 80% of the trading on the short side of the market. This means that each of those four, criminal institutions holds a larger concentration in this market than the percentage which earned the Hunt Brothers their criminal conviction.

More to the point; regular readers are fully aware that all of these Western banks are, in fact, nothing but tentacles of one, gigantic, financial behemoth: the One Bank . This single crime syndicate is allowed to permanently hold a short position in the silver market more than four times more concentrated than what U.S. courts have already ruled is illegal.

That’s called a double-standard. There is one set of rules for the Criminals “trading” (illegally) on the short side of the market. Meanwhile, we have another totally opposite set of rules for those individuals/entities looking to engage in honest commerce in the silver market. Put more simply: there are no rules for the Criminals, and (by implication) no rights for the honest traders.

Those are the West’s “bullion markets”: permanent cesspools of financial crime, with the Big Banks holding massively illegal short positions, which are grossly disproportionate in size to short-trading in all other commodity markets. This provides us with one of the reasons for the extreme reluctance of these crooked Big Banks to participate in offering the SGE’s (real) gold contracts.

For any player in any market with a short position; increased “long” trading directly and immediately puts price pressure on any short position in that market. Sitting on the largest (illegal) short positions in the history of human commerce, these Big Banks have little appetite for facilitating the trading of actual bullion at the SGE, to put it mildly.

However, once again, this pulls our focus back to the paper-fraud markets in the West. In the West, for some reason, these same Big Banks have (supposedly) taken an entirely opposite attitude toward being big players on the long side of the market. Indeed, these Big Banks volunteered to act as “custodians” for the largest “bullion funds” in the Western world: the bankers’ notorious bullion-ETF’s.

In legitimate spheres of the bullion world; investors who trade in legitimate bullion funds are required to bear the storage costs for holding that bullion. Thus the unit cost of their holdings in these funds exceeds the “spot” price of the bullion market at that time, by a modest premium, in order to cover those storage costs. Not so, with respect to the Big Banks’ bullion-ETF’s.

The largest of these so-called bullion funds are the SPDR Gold Trust, and the iShares Silver Trust, better known by their market symbols ( GLD and SLV, respectively). The purchasers of units in these funds pay no premium for their “gold” and “silver”. Indeed, they can often purchase their units at a slight discount to the spot price.

If we were to assume that GLD and SLV were legitimate bullion funds, which were being administered for the benefit of unit-holders, then consider what is implied. As custodians; the Bullion Banks would not merely be providing free storage for the long investors entering this market, they would be subsidizing those investors, since the storage costs for the Big Banks, themselves, are greater than zero.

Note further that this is (potentially) an infinite subsidy for long investors in the gold and silver market, since they have pledged to act as custodians (and thus subsidize) any and all investors in these funds. What we are supposed to believe is that these mega-shorts, with short positions in both the gold and silver market which are so large as to be obviously illegal, are also the largest philanthropists on the planet on the long side of the market – offering infinite subsidization for long investors in gold and silver, but only in the Western markets which they control.

It is for this reason that few serious commentators in this sector regard these banker bullion-ETF’s as legitimate enterprises, which then brings us back to the natural reluctance of these Big Banks to facilitate the legitimate trading of gold at the SGE. This leads to the latest headline in this melodrama:

Foreign banks in China could face curbs if they snub benchmark

As part of making the SGE an equal with the New York and London exchanges; China has insisted that it, too, will begin issuing a daily “gold fix.” Again for the benefit of newer readers; a daily “gold fix” (or “silver fix”) is an attempt to establish a daily price norm, from which deviations in price would then be measured.

While largely symbolic, these price “fixes” have a psychological impact on the market. For this reason, it will again be little surprise to readers that this same cabal of Big Banks has now confessed to the serial manipulation of both the gold fix and silver fix, in Western markets. And for that reason; it is little wonder that China is insisting upon its own “gold fix”.

Just as Western banks have shown little enthusiasm in facilitating the real gold contracts of the SGE, so too are they reluctant to endorse China’s gold fix, through taking on a (supporting) role in its administration. Thus the need for China to again flex its financial muscles.

China has warned foreign banks it could curb their operations in the world’s biggest [real] bullion market if they refuse to participate in the planned launch of a yuan-denominated benchmark price for the metal, sources said.

The conundrum which faces the Western banking crime syndicate? They can’t manipulate what they don’t control, and in order to attempt to control trading at the SGE, they need their own share of seats at the table.

After China’s latest volley, the ball is now in the bankers’ court. The view from this corner of the world of journalism is that these Big Banks will not be able to resist their natural impulse to seek to fully corrupt this market (as well), and will become full participants – either directly, or through (hidden?) proxies. For the banksters, one “free” gold market would be one too many.



The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

Mr. Dr. & Mrs. Keith H. Kerr 2 years ago at 7:03 PM
The thought of a purely PHYSICAL GOLD Exchange is a dream come true - long overdue. Eliminate the crimally manipulative Western Bankers who have suppressed the price of gold & silver for decades. China is also getting on the physical silver bandwagon recently. Jeff - do you know if China plans to open a separate physical silver exchange - or perhaps will combine it with the SGE?
Jeff Nielson 2 years ago at 7:49 PM
Keith, here maybe readers can help ME out, or perhaps that wealth of Chinese research, Koos Jansen could do so?

Because silver is not OFFICIALLY a "monetary metal" (like gold), we have this surreal dichotomy of a world with TWO monetary metals, but governments which are only required to provide accurate information on their holdings with one of these metals -- at least somewhat accurate information.

The silver market is definitely too small, at anything close to the current, fraudulent prices, to have an "exchange" of its own. It would be more likely for the SGE to simply expand its own operations, to give silver a (relatively) equal footing to gold.

It is the fact that silver has lost even quasi-official status that makes it so difficult to attempt to provide any sort of DEFINITIVE market analysis. This certainly extends to the actions of sovereign governments vis-a-vis silver.
Rick 2 years ago at 7:52 PM
Page 42,

115 States not to coin money
A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts.

The Australian Constitution (still in play today) This puts the RBA at a place of illegality!
Jeff Nielson 2 years ago at 1:09 PM
Thanks Rick!

Yes, this is yet another disconnect/illegality in our present Crime Syndicate System. The U.S. Constitution has a similar provision, making the Federal Reserve "unconstitutional", and thus illegal.

Canada has never had the foresight or motivation to entrench such standards of integrity. We just always assume that whoever is in charge will be "a nice person". How's that been working out lately?

However, even our relatively modest Constitution clearly makes all of our government's "War on Terror" laws null-and-void, as the government cannot come close to meeting the standard of extraordinary circumstances necessary to nullify our Constitutional rights.

I'm sure it's similar there nearly right across all the Western world. Illegal "laws" are being created-and-enforced, which nullifies the legitimacy of the regimes who are guilty of this.
Rick 2 years ago at 6:53 PM
Yes Jeff, its quite something the way things are traveling. The Australian Gobblement is, according to the Constitution (if we still have one) null and void, illegitimate on a number of levels, and i have bewilderment at the prospect of how many educated and qualified people that are amongst the people that aren't (or the media wont air) saying or doing anything about this! A bit on the scary side. Hey by the way you mentioned that silver is not OFFICIALLY a "monetary metal", if so how can one explain the Dollar value denominated on so may coins with the official head on the reverse? That is fundamentally calling it money all be it astronomically under valued, but money all the same?
Jeff Nielson 2 years ago at 6:35 PM
"Hey by the way you mentioned that silver is not OFFICIALLY a "monetary metal", if so how can one explain the Dollar value denominated on so many coins...?"

Good question.

First of all, while you didn't specify the precise context where I made that remark, I strongly suspect it was when I was discussing our governments, and the monetary system in general.

In that respect; I stand by my remark. "Silver reserves" are NOT recognized as money in the international monetary system, unlike gold. Gold IS "money", in every sense, at the international level.

However, as you point out; with our minted coins, suddenly silver DOES acquire a "monetary" status. Note that the simple fact that a coin has a legal tender value does not make it a "monetary metal". Our nickels, dimes, and pennies (when they still circulated) are most definitely NOT made from monetary metals -- but they do have a face value.

Where your point is valid is that with respect to VALUABLE minted coins, they are always/exclusively gold or silver -- except for the occasional platinum (or even palladium) coin. But those other metals are "precious metals" as well.

So the question becomes: why make VALUABLE coins out of silver, if silver is not (at the government/international level) a "monetary metal"? Obviously that's a question which I can't answer, because our governments have no rational answer for their arbitrary choice.

The REAL answer is that the Sixty-Two Oligarchs wanted silver removed from our monetary system -- in order to get it out of the hands of the PEOPLE. Get the people to hold banker paper, and then you can rob them blind, systemically, with fiat-currency fraud.
Rick 2 years ago at 7:10 PM
So true Jeff, fiat tends to mean "let it be" or let the looting begin, or let the looting go live! "permanent cesspools of financial crime" as you so precisely put it, pretty much says it all! the Aurum notes designed for Peak Prosperity that the Valaurum team produced are in my opinion the best thing i have seen to date and i imagine producing these in silver "if possible" would transform the planet into a more stable and amicable dimension to exist in.
Rick 2 years ago at 12:12 AM
"Eliminate the criminally manipulative Western Bankers" Eliminate is my call too, but i do think they have or are quickly running out of magic tricks, so time up you psycho's, the hangover is gonna be deadly!
Ruel 2 years ago at 8:37 PM
"Based on LBMA statistics, the ratio of paper to physical gold traded is therefore 309:1."

Source: http://tocqueville.com/insights/paper-gold-utopia-alchemists
Jeff Nielson 2 years ago at 11:56 AM
Thanks for the info Ruel!

I had heard that the paper-to-metal ratio had soared far above the "100:1" to which Jeffrey Christian originally confessed. Essentially, these are all just fantasy-numbers now.

When you get to a point in a commodity market where less than 1% of the "trading" in that market actually involves the commodity, itself, we're already at maximum fraud. Anything beyond this simply heaps absurdity on top of outrage.

The flip side of the coin is that the manipulative capacity of this crime syndicate is NOT infinite. Soaring "ratios" do indicate even greater market stress. In turn; this indicates we ARE closer to "the end" -- even if we cannot perceive any change.
Dr. & Mrs. Keith H. Kerr 2 years ago at 5:36 PM
Jeff - it seems like the mortar between the bricks of the Fraudulent Manipulative HOUSE are starting to dissolve – some form of collapse is inevitable. Fiat dollar will weaken further. Canada may have to lower interest rates again next Wednesday. Debt levels are soaring everywhere. Q.E. 4 nows seems the future temporary fix. Crazy Glue for the house won’t work. Chinese economy weakening too.
Anthony 2 years ago at 11:25 AM
Hi Jeff, Do you think its automatic that the price of gold rises sharply once actual physical gold is traded in China and the western fraud paper money is slowly moved on? Surely once the Shanghai Gold Exchange is up and running gold prices have to increase greatly?? Great article Thanks Anthony
Jeff Nielson 2 years ago at 1:16 PM
Anthony, as long as the banksters can satisfy IMMEDIATE demands for physical bullion, the terms "must" or "have to" simply don't apply. Indeed, one of the central themes of my work for the past few years is that we no longer have "markets" at all.

We have PRICE-FIXING OPERATIONS which simulate markets, because it is cloaked in "market" infrastructure. However, what we really have is a massive trading fraud, operated via (essentially) a SINGLE computer trading algorithm.

http://www.bullionbullscanada.com/index.php/commentary/us-commentary/26545-the-banksters-master-program-for-manipulating-markets
http://www.bullionbullscanada.com/index.php/commentary/us-commentary/26606-more-evidence-of-the-master-trading-algorithm

In fact, it's a little more complicated than that. In fact, it's a Master program, with lots of DEPENDENT algorithms, which are programmed to be led by this Master algorithm. It's not unlike "The Lord of the Rings" where whomever controlled the One Ring also controlled most of the lesser Rings of Power.
Rick 2 years ago at 12:08 AM
Niece piece Jeff, maybe the world will soon be able to truly pull its head out of its a_s, and get back to some semblance of sanity, or maybe the cabal have already bet the farm and will simply go down pulling every trigger at their disposal, it certainly looks like now or never on so many levels!
Dr. & Mrs. Keith H. Kerr 2 years ago at 9:10 AM
Several sources indicate that worldwide SHIPPING has almost ground to a halt!
This is a very dangerous red flag. Economies are on decline, interest rates are falling – soon into negative territory – fiat currencies are also on the chopping block.
2016 will be a historic year for most people – take refuge in physical gold & silver!
Black Swans are increasing in number unfortunately.
Jeff Nielson 2 years ago at 1:20 PM
Yes, Keith, this is also true, and I've noted the collapse of the Baltic Dry Index previously.

http://www.sprottmoney.com/news/baltic-dry-index-crashes-calamity-or-false-alarm-jeff-nielson-sprott-money-news

In fact, that earlier commentary is now out-of-date, as in that earlier piece I put a question mark beside the significance of that falling Index. It has CONTINUED plunging since then, which removes any question mark.

It might be time to revisit that subject with a new commentary...

Back to top