Wednesday, August 1, 2018

Momentum continues to grow for global gold and silver pricing to be seized by either Shanghai or Dubai

With the U.S. Commodities Exchange (Comex) having to transfer more and more of their futures contacts to London due to massive manipulation which has made it impossible for them to deliver on their promises, momentum appears to be growing in the East for markets like Shanghai and Dubai to one day soon seize control over how gold and silver is priced in the world markets.

In fact there are already concerns right now that China has taken over a form of control from both London and the U.S. when it comes to the pricing of gold, as seen recently in GATA's letter to the CFTC demanding an investigation into this very thing.

For the past month there has been a direct correlation between the value of the Chinese yuan and the price of gold. That is, the higher the yuan, the higher the price of gold and especially vice-versa. 
The value of the Chinese yuan is essentially controlled by China’s central bank.
The Shanghai Gold Exchange is the largest physical gold market in the world, and has been taking more and more market share from the West as exchanges in London and New York focus primarily on paper contracts over physical deliveries.  However there is also another player beginning to infringe on global market share, and it is the Dubai Gold and Commodities Exchange which has seen another 2018 record occur in the month of July.
The Dubai Gold and Commodities Exchange (DGCX) announced today that it experienced its highest average open interest (AOI) in July, surpassing 300,000 contracts. This builds upon a record-breaking first half of the year for trading value and volumes. 
In July, the exchange saw solid trading results, with an AOI of 323,477 contracts. This impressive result brings the total volume for 2018 to an all-time high of 304,398 contracts which is an increase of 29% from 2017. 
Due to a rising demand for China-centric products, the best performing asset classes for July were the Shanghai Gold Futures and Chinese Yuan Futures. The volume for Shanghai Gold Futures jumped by 71% when compared to the same period last year. Chinese Yuan Futures were also up by 64% year-on-year. – Finance Magnates
Just as China is seizing more and more market share from London and Chicago in the oil industry with the advent of their Yuan-denominated oil futures contract, so too is their commodities market quickly becoming the world's primary gold and silver exchange.  And thus the real question that remains for investors is not if China will permanently take over control for the pricing of gold, but rather when this mechanism is completely removed from their hands.


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