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Ophir

11,173 Posts.

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12/05/16

18:19

Post #: 17751509
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Originally posted by 23skidoo ↑

I think I understand the important effect of the Shanghai Yuan gold fix. While it's not yet the vehicle to propel gold metal to the stratosphere, it is a powerful gold price stabilisation force.
We have two gold prices, capable of variation at any instant, I.e. The USD paper LBMA / Comex fixes which are not related to gold metal sales, and we also have the Shanghai physical metal sales, fixed in Yuan.
Only the Shanghai prices are real because that is where metal changes hands.

It's crucial to understand the nexus between the USD and gold.

if the US banks drive the "paper" GP down, that is the same as strengthening the USD. In the process they depreciate the Yuan. China controls the Yuan GP fix, And the Western system will be very reluctant to adjust the Yuan/USD exchange rate to suit an increased USD price.
The exchange rate must be closely controlled In the interests of both the US and China.

The Shanghai Yuan gold price has "tightened the vice" on the LBMA and Comex, and now they are very limited in their ability to drive the GP down more than fleetingly.

So the upshot is that China is now controlling the GP using the Yuan/USD exchange rate!

While China and Russia are still accumulating, thay have a huge vested interest in holding GP rises to very modest levels. I expect only gentle rises, until they are ready to move to the next stage in their plans for gold and silver, and then it's going to get very exciting.
23.

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Yes quite, 23, with about 15,000 tonnes apiece Russian & China clearly don't want to pay top dollar for the next 10,000 tonnes they're after ... not to mention the sheetload of silver
5 Upvote

0 Great analysis

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