Friday, April 15, 2016

When the SGE declares its own gold price next week, the arbitrage battle for gold really begins

April 19 is the expected day the Shanghai Gold Exchange (SGE) is to declare its own Yuan denominated gold price in the world's largest physical gold market, and we are now less than four days away from what could be a radical sea change in the entire precious metals industry.

This is because no one yet knows at what price the SGE is expected to open with next week, but since the market currently marks up gold sales with as much as a 40% premium already, chances are extremely good that it will be much higher than the price long controlled by London and the U.S. Comex.

And should this truly be the case, where China announces a price that is greater than the Spot price determined in Western markets, then part one of China's gambit will be revealed, and it involves an arbitrage scheme meant to entice a shifting of all metals Eastward, using the greed of the West to accomplish this.

An arbitrage is when one market buys or sells an asset at a much different price than another market, allowing customers and investors the chance to skim profits from the difference between the two prices.  And an example of this would be if the SGE offered a buy price of say $1600 in U.S. dollar equivalent, where the current Comex spot price is $1235.  This difference in price would trigger a run on the Comex, where investors would try to buy up all available gold contracts, demand delivery, and then sell it to the SGE and collect the difference in profit.  The result of course is that the West would suddenly be drained of all their gold, and now China would have sole control over the global gold market.

Analyst Dr. Jim Willie also spelled this out in an interview he did earlier this week.

The Chinese attack within the Gold market could hit Satanist bankers where they live, in the fire of mid-April.... The arrival of the Gold futures contract in Shanghai poses an additional risk for the Western banker cabal, a grand crime syndicate which extends to the energy firms, the military industrial complex, the big pharmaceutical firms, and the press networks. 
A real valid bonafide Gold contract which delivers physical gold would enable vast arbitrage to buy cheap in London and sell dear in China. Any acceleration in the arbitrage activity, combined with any sincere attempt to set the Gold Fix in a reasonable manner that puts equilibrium as priority, and the Western bankers will face the USDollar kicked to the curb and possible global boycott. - Rogue Money
It is no coincidence that one time London Gold Fix committee member Deutsche Bank came out yesterday and admitted to the fraud and manipulation that has long taken place in the Western gold markets, and these revelations will provide China a strong boost for their new pricing mechanism if/when it comes out next week.  And besides just investors rushing to leave the Comex and begin participating in the SGE, a more important group of metal players will just as likely do the same, and they are the miners and refiners of gold and silver who will gladly take their production and move East to finally get a price worthy of their output.


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