China to Take More Control of Global Gold Trade

AG_Blog_feat_China global goldChina has made it abundantly clear that it wants to gain more control over the global gold market. The country is taking steps right now to solidify its place among the powers that set the global gold price. While London and Comex have long been the authority of global gold trade, that is about to change…

This should come as no surprise, however. China has reportedly been buying massive quantities of gold in recent years, and has taken a number of steps to further its agenda in the global financial marketplace and among the elite of international trade.

China is the world’s largest gold producer and one of-if not the biggest-gold consumers on the planet. China also happens to be the world’s second largest economy and appears to be on track for significant growth in the coming years.

China wants more control over global gold, and has, until recently, been at the mercy of London and Comex. The reality is, however, that participation in the Comex gold market is largely made up of speculators. Only a fractionally small percentage of Comex gold contracts are actually delivered, and many experts believe that prices traded on the exchange are a distortion of true, physical demand.

With China being the biggest player in the physical gold market, it is understandable that they would want more control. And they are getting it…

The Bank of China recently became a member of the London Bullion Market Association’s group of lenders responsible for setting the price of gold and additional Chinese banks are in the process of becoming members.  This is historic, in that it adds a true and honest player with a significant stake in the gold market, versus keeping the price fixing in the hands of a few banks that set the price.  That price setting has not reflected actual market demand.

As gold becomes increasingly important in the global currency landscape, it would seem China is not going to simply stand by while others control the market.

Likely not by coincidence, China’s ability to actively participate in the global gold market may boost its currency, the yuan.

China would have the ability to promote yuan denominated gold trading. This, along with a Shanghai gold fix in yuan, puts the nation in a position to potentially move further away from the dollar.

As a result, the dollar could potentially see its influence diminished even further…

The wheels have already been set in motion. China’s currency will most likely be admitted to the IMF’s Special Drawing Rights in October of this year, gaining acceptance as a global reserve currency.

China has been very busy in the bullion market, and according to some reports has built an extremely significant holding of gold.  Their reported holdings, many experts believe, are significantly less than their actual holdings.  In order to be made part of the IMF Special Drawing Rights of global currencies they have intentionally increased their gold reserves as this bolsters their arguments for inclusion.  However, it seems that even though they have reported adding 53,32 million troy ounces to their holding over the last six years, an increase of 57%, industry experts believe that this is far LESS than their actual reserves.

Do the math…

China is taking additional steps to boost the attractiveness of the yuan, but they are also careful not to fully reveal the depth and strength of their actual gold reserves.

As the yuan becomes more widely accepted and used as a reserve currency, its success will likely come at the expense of the dollar.

As the dollar declines in value, dollar denominated assets will decline in value as well.

Inflation will take hold, business failures and credit defaults will rise, and the U.S. could potentially enter an economic slowdown of dramatic proportion.


Gold, silver and other precious metals may be the answer. These metals may potentially increase in value during such a scenario, and may potentially hold more value than declining dollar denominated assets.

If China and the IMF think gold is a necessary ingredient, shouldn’t you?

Don’t wait until it’s too late. China is moving rapidly to further its influence among the global economic elite. This year could potentially be a key turning point for the dollar, and could therefore potentially see the price of gold increase dramatically.

Like it or not, the writing is on the wall.

Don’t wait until the value of the dollar declines. Explore your options for allocations in precious metals today.

An IRA account is one of the simplest and most convenient ways to gain exposure to these key assets, and it has NEVER been easier than it is today to get started. Given recent moves by China, now is the time to be proactive…

Please reach out to our experienced precious metals executives with any questions that you might have about investing in gold and the process of setting up a Gold IRA. Call us today at 1-800-341-8584 FREE to get started


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