Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

China Joins the New London Gold Fix

  by    1   0

It’s official: China now plays a small role in directly setting the price of gold in Western markets. For the first time ever, a Chinese bank has joined the twice-daily gold price fixing process run by the London Bullion Market Association (LBMA).

15 06 18 bank of china

As we reported back in February, this news was anticipated. The LBMA has replaced the old London Gold Fix with a new, electronic mechanism in an effort to increase transparency in the gold markets. Part of this restructuring of the price fix includes opening the doors to more banks. The Bank of China is a state-owned institution, and joins the ranks of Barclays, Goldman Sachs, HSBC Bank, JPMorgan Chase London, Bank of Nova Scotia, Societe Generale and UBS.

While this development is unlikely to have a dramatic effect on the price of gold in and of itself, it is a harbinger of the times to come. Eastern markets will inevitably play an increasingly important role in global finance. The Asian Infrastructure Investment Bank is one of the latest examples of this new paradigm.

As China takes a more central position in the global economy, precious metals could also return as a significant form of money. The Bank of China has joined the LBMA, and China is simultaneously laying the groundwork for a gold market that could directly compete with the Western-controlled systems. It wants the Chinese yuan to become essential to the international gold trade. To that end, China recently announced its largest gold-investment fund ever: the “Silk Road Gold Fund”. MarketWatch reports:

In addition to buying stakes in gold-mining projects and companies in the New Silk Road area using ‘private-equity and venture-capital methods,’ the new fund would also be used to invest in gold-miner stocks and to set up gold exchange-traded funds, the state-run Shanghai Securities Journal quoted an unnamed insider as saying on Monday. The fund may also boost China’s power over the world gold market and could increase the use of the yuan in pricing gold…”

In the midst of all this progress, the world is now well aware that China has been stockpiling physical gold as a way to stabilize its foreign exchange holdings. The exact amount of those reserves remain unknown.

Some researchers believe China may now unofficially hold the second largest gold reserves in the world, with as much as 2,510 tons of the metal. Other analysts think China may have even larger unofficial gold holdings, but due to a lack of transparency, the exact numbers are impossible to calculate. Near the beginning of this year, evidence emerged that China was on track to consuming more gold than the world is currently producing.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

The Lurking Inflation Monster

Where’s the inflation? The Federal Reserve printed money for nearly a decade, and yet, inflation – as measured by the government – has been “muted.” What gives?

READ MORE →

Gold Set to Join the “All-Time Highs Club” — Bloomberg Intelligence

Gold is poised to join the “all-time-highs” club in the upcoming decade. No, this isn’t the musing of some gold-bug. It’s analysis from a pretty mainstream source — Bloomberg Intelligence. Stocks have set new records over the last several weeks and the dollar hit 2-year highs this fall. But writing in the commodity outlook, Bloomberg […]

READ MORE →

Recession Early Warning? Spending By the Wealthy Is Slowing

America’s economy is built on consumption. Average Americans have been pushing the US economy along, spending money they don’t have. But as we’ve reported, there are signals that the credit cards might be close to maxed out. Now there appears to be another warning sign – the wealthy are reining in their spending.

READ MORE →

Poland Brings Gold Home; Calls It a Symbol of Strength

Poland has repatriated 100 tons of gold from England. National Bank of Poland Governor Adam Glapiński announced the yellow metal’s return home on Monday. “The gold symbolizes the strength of the country,” Glapiński told reporters.

READ MORE →

Is the Auto Loan Bubble Nearing Its Popping Point?

a check engine light is onHow much more can the auto loan bubble blow up before it pops? Total auto loans and leases outstanding for new and used vehicles increased by another 4.3% year-on-year in the third quarter, according to the latest data from the Federal Reserve. This was a factor in pushing total American consumer debt to a new […]

READ MORE →

One thought on “China Joins the New London Gold Fix

  1. […] will happen as Asia – especially China – comes to play a larger role in global finance and the gold markets? What if China begins to directly back its yuan currency with even a small fraction of its unknown […]

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now