China Plans to Takeover London as the World’s Gold Price Fixer
This is a major shift in gold bullion price fixing. The London Bullion Market Association (LBMA) has been at the epicenter of setting bullion prices for over a century.
But on April 18, 2016 an overnight historic event took place when China, the world’s top gold producer, importer, and consumer launched a new yuan-denominated trading platform to fix the price of gold. China’s bold move to create this on the Shanghai Gold Exchange is in response to having to depend on the U.S. dollar in international transactions. And while the London Fix is conducted in dollar, pound and euro, the Shanghai Fix will only be conducted in yuan.
The new exchange fixes gold prices twice every working day. News agency Reuters called this, “An ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market.”
Marwan Shakarchi, chairman of Swiss-based refining group MKS said, China “is a market of 1.2 billion people and simply cannot be neglected.” He went on to describe the implications of this, “I am convinced that in the future we won’t say China is at a premium or a discount to London, but vice versa.”
This historic event isn’t just about setting prices of gold and silver. This move comes after a monumental announcement by the International Monetary Fund the Chinese yuan is being added to its elite basket of reserve currencies.
This is the first time a currency has been approved by the IMF since 1999 when the euro replaced the German deutshe mark and the French franc. This approval was not something the U.S. wanted to happen.
Timothy Adams, president of the Institute of International Finance and former U.S. Treasury undersecretary noted the importance of the yuan being added to the IMF approved currencies saying, “It’s a big win for Beijing as they look to bolster their image and to get the respect they think they deserve.”
Prior to the approval, U.S. Treasury Secretary Jacob Lew openly opposed efforts saying Beijing still has more work to do to internationalize the yuan: “Further liberalization and reform are needed for the (yuan) to meet this standard.”
And according to former presidential candidate Ron Paul, the U.S. has reason for concern, “There’s a huge bubble with the dollar. The fundamentals are a disaster.”
And he’s not the only one warning Americans. Legendary investor Jim Rogers is also very concerned, “The U.S. dollar is a terribly, terribly flawed currency. The U.S. dollar is not a safe haven.”
With the U.S. government’s reckless spending, other countries like China are making moves to protect themselves from the dollar’s devaluation. China is demonstrating to the world they want to control the price of gold while possibly looking to supersede the dollar as the world’s next reserve currency.
Given all the global economic uncertainties, now is the time to protect your financial future. To learn more about how you can eliminate the middleman and purchase gold and silver call one of Berkshire Gold Direct’s strategists today at 1.800.614.8221.
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