Banks Crush Gold Prices On The Opening Day Of The New Chinese Gold Exchange
By Kenneth Schortgen Jr Finance Examiner
On Sept. 18, the Chinese opened a new public gold exchange that will serve as both an alternative and competitor to the Western backed gold market.
But unlike the U.S. Comex and London based futures markets, China's Shanghai exchange will be dedicated to cash and carry gold buying and selling, and will accelerate the day when the U.S. no longer controls the spot price of precious metals.
And while this attack on the spot price was taking place in the Western gold markets, China was seeing far more buys than sells on its exchange, and bears the question of why prices fell when there was far more demand than supply occurring in the physical delivery markets?
For it is this dichotomy between the Western paper markets, and the physical Eastern markets, that will be the catalyst for the shift of price discovery soon moving away from the Comex and onto the Chinese controlled Shanghai exchange.
The graph pattern above repeats itself almost every night. Gold/silver get smashed when the fraudulent Comex paper trading is at its most active and Asia is asleep. The Asians wake up and resume their furious buying.
Gold premiums in Shanghai are as high as I’ve seen them in a long time. Silver has been in backwardation all summer. Then, as Asia closes down the metals get hit again, starting in the fraudulent London market. Wash, rinse, repeat. - Dave Kranzler, Investment Research Dynamics
Gold demand in the East, where China and India provide a major portion of consumer and bullion bank purchases, is far greater than in the West where physical deliveries have declined over the past two years.
In fact, on a single day last year when the Peoples Bank of China released tons of gold in the form of jewelry and other physical molds, over 10,000 Chinese consumers stood in vast lines just to have the chance to buy the precious metal as a hedge against devaluing currencies.
Comparatively, best estimates by industry analysts predict that only 1-2% of Americans hold physical gold, and place them at or near the bottom in ownership of physical precious metals in the industrialized world.
And perhaps this is primarily due to a herd mentality when it comes to investing, where Americans jump from one sector to another as the market creates one bubble after another to prolong an economic boom based on cheap money and quantitative easing.
Logically, since the American people and the Western banks have divested themselves of most of their physical gold through leases, or reliance in paper gold investments such as an ETF, it is no longer reasonable for the Federal Reserve or the Comex to be controlling the price of gold or silver, especially as nations like China, India, and Russia control the lion's share of the physical metal.
And perhaps the reason why the Comex has not fully given up that price control yet is because having dominion over the spot price allows the central banks in the West to keep gold prices suppressed in a last ditch attempt to protect the dollar, and stem the growing tide taking place around the world that seeks a return to the gold standard and a new and more stable reserve currency.
Banks crush gold prices on the opening day of the new Chinese gold exchange