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China moves quickly to control gold markets after end of London fix

Chinese Panda gold coin
Chinese Panda gold coin
Courtesy of

Over the past 18 to 24 months, China has been far and away the largest importer of physical gold. In fact, along with India and Russia, nations in the East have taken advantage of the depressed metal prices to virtually drain both the U.S. and London markets of their once dominant stranglehold over the precious and monetary metal.

And with the combination of their massive deposits, coupled with the end of the London price fix cabal, China on Aug. 19 is now using this position of control to begin the setup of a new facility and mechanism whereby they intend to become the new determiners of global gold prices, and more importantly, where the metal will soon be priced, bought, and sold primarily in Yuan rather than through the longstanding tradition of using dollars, which controlled gold prices through manipulated paper futures contracts.

It has been less than a week since the 117 year old London silver fix was disbanded and moved to an purely electronic system. And in that short period of time, China appears to have been fully prepared for this change through their expansion of the number of institutions they are allowing to import gold, and market in one of the several new metals facilities being created in both Hong Kong, and on the mainland itself.

China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal.

The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre. - Reuters

On top of this move to expand the number of bullion banks allowed to import gold to supply current and new gold market facilities in China, the Far Eastern economic power is also looking to take control over price determination and price discovery, which will have a chilling effect on the dollar and on Western banks who have manipulated the prices for years to keep interest rates down, and protect the global reserve currency.

Several economic analysts and forecasters in 2014 have predicted that within a very short period of time, the global financial system will require a reset, or at the very least, an end to the dollar being the world's reserve currency due to the massive accumulated debt that is around 250 times the total amount of annual global GDP when you account for the over $1.4 quadrillion in outstanding derivative contracts. And since the world has created this disastrous threat by running the global financial system solely on fiat currencies since 1971, when the reset does take place, many will be calling for a return to the gold standard. And because of this, China is quickly becoming prepared for that day by creating the mechanisms now to control the future price of gold, and thus, be first in line to determine the next global reserve currency.

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