Yuan Denominated Gold Fix Begins, Gold & Silver Shorts in a Panic?

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Submitted by Craig Hemke:

By about 8:30 London time Tuesday morning (3:30 am EDT), we’ll know. And won’t it be fun to find out? How will this process work? At what price will tomorrow’s yuan-denominated Fix be set?

From a “process” stand point, I don’t suppose it will be radically different. The current spot market will be assessed and a “fix” price will be set. Then, for the next 24 hours, this will be the accepted price for wholesale gold that is transacted in yuan. Come Wednesday, the Fix will be reset to a new price according to market conditions.

But what about “price”? What price will the Chinese use? Again, this will be a yuan-denominated price so you’ll have to take relative currency valuations into consideration, as well. At the end of the day, I do not expect this first Chinese fix to radically alter the landscape.  The Chinese will likely assess the current spot prices, particularly in Asia and Shanghai, and set tomorrow’s fix accordingly. I asked Andrew Maguire about this earlier today and he indicated it might be three to five dollars above whatever spot price was currently being seen in London. 

That sounds about right. If they do too much right away, they risk delegitimizing their process. They also risk some significant arbitrage. So, in the end, don’t expect some crazy new price scheme overnight. However, DO EXPECT this new competing price fix to have a major impact over time. As we’ve stated repeatedly, anything that draws power away from the manipulated hellholes that are London and New York is a good thing!

(Of course, I could be wrong. Maybe all hell is about to break loose. I guess we’ll know soon enough.)

The big news over the weekend was the total failure of the Doha crude oil meeting. When crude opened last evening, it immediately fell nearly 6% and it’s currently still down 3.5%. Given the way that the S&P was linked with rising crude last week, you’d  think that the stock market would be sharply lower. 

HAHAHAHAHAHA! YOU SILLY RUBE! WHY WOULD YOU THINK THAT?!? THAT’S NOT ALLOWED TO HAPPEN!