China Becoming Global Gold Hub And Gold Price Discovery Centre

http://www.zerohedge.com/news/2014-08-20/china-becoming-global-gold-hub-and-gold-price-discovery-centre

China Becoming Global Gold Hub And Gold Price Discovery Centre

by GoldCore on 08/20/2014 05:09 -0400


Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month
China is moving closer to positioning itself as the physical gold trading hub of the world and the world’s gold price discovery centre. It is a natural progression for the largest economy in the world and for the world’s largest gold buyer, importer and indeed producer.

The Shanghai Gold Exchange (SGE) is launching its yuan denominated international bullion trading exchange next month. This is another important step in internationalising the yuan or renminbi and positioning it as an alternative global reserve currency.

(AK NOTE: Interesting chart of six monetary "phoenix"-ings of the financial
system since 1450... now the attempt to make China the Global Reserve currency...)

Bloomberg reports this morning that

The Shanghai Gold Exchange plans to start bullion trading in the city’s free-trade zone on Sept. 26, according to three people with knowledge of the matter. 

The people asked not to be identified because they aren’t authorized to speak to the media. Gu Wenshuo, a spokesman for the exchange, confirmed that the trading system is being tested, without giving further details. 

Shanghai wants to become a regional bullion-trading hub, giving foreigners access to the world’s largest physical-gold market, Xu Luode, the exchange’s chairman, told a conference in Singapore in June. 

The gold contract will be priced and settled in yuan and the infrastructure is in place for trading to start in the third quarter, Xu said in June. The zone will have a vault capable of holding 1,500 metric tons of gold, which can either be imported into China or be in transit to other markets, Xu said. 

China is seeking to open up its bullion markets just as domestic demand weakens. 

Consumption contracted 19 percent in the first six months of the year, according to the China Gold Association. Bullion of 99.99 percent purity traded on the Shanghai Gold Exchange climbed 8.7 percent this year, damping demand which reached a record in 2013.

Reuters reports this morning that

China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal. 

The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre. 

China and other Asian gold trading centres such as Singapore are calling for more localised pricing of the precious metal as they seek alternatives to the so-called London fix, the global benchmark for spot gold prices, which is being investigated by regulators on suspicion that it may have been manipulated. 

Standard Chartered (STAN.L), Shanghai Pudong Development Bank (600000.SS) and China Merchants Bank (600036.SS) were given regulatory approval recently to import gold, five sources with direct knowledge of the matter told Reuters. 

China approached foreign banks, gold producers and refiners to participate in SGE's international bourse, sources told Reuters earlier in the year, to boost its position as a price-discovery centre for gold. It plans to launch three physically-backed gold contracts.
The chairman of the exchange said in June that China should have its own pricing benchmark as it is the biggest consumer and producer of gold.

Conclusion

Chinese gold demand has fallen from record levels in recent months. this was to be expected given the huge leap in demand seen in recent years. Nothing moves in a straight line and a fall was inevitable and reflects the natural ebb and flow of demand, one would expect.

However, an important fact, not realised by most market participants, is that the people of China were banned from owning gold bullion by Chairman Mao in 1950. This means that the per capita consumption of over 1.3 billion people is rising from a miniscule base. This suggests that demand will consolidate at these levels and could again return to record levels - particularly if there are losses in the Chinese property market or stock markets.


This prohibition continued until 2003 when the Chinese gold market was first liberalised and China made its first steps to becoming a global gold hub to rival New York or London.

Since the market in China was liberalised, gold in yuan terms has risen by more than 250% while the stock market has performed poorly.

Even after the significant increase in demand seen in recent years - Chinese per capita gold ownership remains well below that of the levels seen in India and other Asian countries and indeed below levels seen in more affluent Hong Kong.

Culturally, India is known to have the greatest affinity for gold in the world. China had a similar cultural affinity prior to the "cultural revolution" and in time its levels of gold ownership will likely rival those seen in India, Vietnam and other Asian countries.

Within the lifetime of many Chinese people living today is the experience of hyperinflation as many middle aged and elderly Chinese people experienced hyperinflation in 1949.

Therefore, as in Germany, there is a greater awareness of what inevitably happens when a central bank debases the paper currency.

Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” or major change in the fundamental supply and demand situation in the gold and silver bullion markets.

This is particularly due to investment, store of wealth and central bank demand from China and the rest of an increasingly affluent Asia.

Gold Bust (2.8 Kilogramme) of Deng Xiaoping
 (Reuters/Bobby Yip)

It is worth noting that the People’s Bank of China’s official gold reserves are very small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $3 trillion.

The People’s Bank of China is continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices. They also do not wish to create a flight from the dollar – thereby devaluing their sizeable dollar reserves.

Expect an announcement from the PBOC, sometime later this year or in 2015, that they have trebled or even quadrupled their reserves to over 3,000 or 4,000 tonnes.

Source: China Becoming Global Gold Hub And Gold Price Discovery Centre

Receive our award winning research here

India Slams US Global Hegemony By Scuttling Global Trade Deal, Puts Future Of WTO In Doubt

India Slams US Global Hegemony By Scuttling Global Trade Deal, Puts Future Of WTO In Doubt

Submitted by Tyler Durden on 08/01/2014 15:44 -0400


Yesterday we reported that with the Russia-China axis firmly secured, the scramble was on to assure the alliance of that last, and critical, Eurasian powerhouse: India. It was here that Russia had taken the first symbolic step when earlier in the week its central bank announced it had started negotiations to use national currencies in settlements, a process which would culminate with the elimination of the US currency from bilateral settlements.

Russia was not the first nation to assess the key significance of India in concluding perhaps the most important geopolitical axis of the 21st century - we reported that Japan, scrambling to find a natural counterbalance to China with which its relations have regressed back to World War II levels, was also hot and heavy in courting India. “The Japanese are facing huge political problems in China,” said Kondapalli in a phone interview. “So Japanese companies are now looking to shift to other countries. They’re looking at India.”

Of course, for India the problem with a Japanese alliance is that it would also by implication involve the US, the country which has become insolvent and demographically imploding Japan's backer of last and only resort, and thus burn its bridges with both Russia and China. A question emerged: would India embrace the US/Japan axis while foregoing its natural Developing Market, and BRICS, allies, Russia and China.

We now have a clear answer and it is a resounding no, because in what was the latest slap on the face of now crashing on all sides US global hegemony, earlier today India refused to sign a critical global trade dea. Specifically, India's unresolved demands led to the collapse of the first major global trade reform pact in two decades. WTO ministers had already agreed the global reform of customs procedures known as "trade facilitation" in Bali, Indonesia, last December, but were unable to overcome last minute Indian objections and get it into the WTO rule book by a July 31 deadline.


WTO Director-General Roberto Azevedo told trade diplomats in Geneva, just two hours before the final deadline for a deal lapsed at midnight that "we have not been able to find a solution that would allow us to bridge that gap."

Reuters reports that most diplomats had expected the pact to be rubber-stamped this week, marking a unique success in the WTO's 19-year history which, according to some estimates, would add $1 trillion and 21 million jobs to the world economy.

Turns out India was happy to disappoint the globalists: the diplomats were shocked when India unveiled its veto and the eleventh-hour failure drew strong criticism, as well as rumblings about the future of the organisation and the multilateral system it underpins.

"Australia is deeply disappointed that it has not been possible to meet the deadline. This failure is a great blow to the confidence revived in Bali that the WTO can deliver negotiated outcomes," Australian Trade Minister Andrew Robb said on Friday. "There are no winners from this outcome – least of all those in developing countries which would see the biggest gains."

Shockingly, and without any warning, India's stubborn refusal to comply with US demands, may have crushed the WTO as a conduit for international trade, and landed a knockout punch when it comes to future relentless globallization which as is well known over the past 50 or so years, has benefited the US first and foremost.

Broke, debt-monetizing Japan, which as noted previously, was eager to become BFFs with India was amazed by the rebuttal: "A Japanese official familiar with the situation said that while Tokyo reaffirmed its commitment to maintaining and strengthening the multilateral trade system, it was frustrated that such a small group of countries had stymied the overwhelming consensus. "The future of the Doha Round including the Bali package is unclear at this stage," he said."

Others went as far as suggesting the expulsion of India:

Some nations, including the United States, the European Union, Australia, Japan and Norway, have already discussed a plan to exclude India from the agreement and push ahead, officials involved in the talks said.

However, such a move would clearly be an indication that the great globalization experiment is coming to an end: "New Zealand Minister of Overseas Trade, Tim Groser, told Reuters there had been "too much drama" surrounding the negotiations and added that any talk of excluding India was "naive" and counterproductive. "India is the second biggest country by population, a vital part of the world economy and will become even more important. The idea of excluding India is ridiculous." ... "I don't want to be too critical of the Indians. We have to try and pull this together and at the end of the day putting India into a box would not be productive," he added.

And yes, the death of the WTO is already being casually tossed around as a distinct possibility:

Still, the failure of the agreement should signal a move away from monolithic single undertaking agreements that have defined the body for decades, Peter Gallagher, an expert on free trade and the WTO at the University of Adelaide, told Reuters.

"I think it's certainly premature to speak about the death of the WTO. I hope we've got to the point where a little bit more realism is going to enter into the negotiating procedures," he said.

But the one country that was most traumatized, was the one that has never before been used to getting a no answer by some "dingy developing world backwater": the United States, and the person most humiliated, who else but John Kerry.

"U.S. Secretary of State John Kerry told Prime Minister Narendra Modi on Friday that India's refusal to sign a global trade deal sent the wrong signal, and he urged New Delhi to work to resolve the row as soon as possible." "Failure to sign the Trade Facilitation Agreement sent a confusing signal and undermined the very image Prime Minister Modi is trying to send about India," a U.S. State Department official told reporters after Kerry's meeting with Modi.

Wrong signal for John Kerry perhaps, who is now beyond the world's "diplomatic" laughing stock and the man who together with Hillary Clinton (and the US president) has made a complete mockery of US global influence in the past 5 years. But just the right signal for China and of course, Russia.

Russia And Germany Allegedly Working On Secret "Gas For Land" Deal

http://www.zerohedge.com/news/2014-07-31/molotov-ribbentrop-20-russia-and-germany-allegedly-working-secret-gas-land-deal

Russia And Germany Allegedly Working On Secret "Gas For Land" Deal
Submitted by Tyler Durden on 07/31/2014 14:50 -0400

While many were amused by this photo of Putin and Merkel during the world cup final showing Europe's two most important leaders siding side by side, some were more curious by just what the two were scheming:

Thanks to the Independent, we may know the answer, and it is a doozy, because according to some it is nothing shy of a sequel to the Molotov-Ribbentrop pact: allegedly Germany and Russia have been working on a secret plan to broker a peaceful solution to end international tensions over the Ukraine, one which would negotiate to trade Crimea's sovereignty for guarantees on energy security and trade. The Independent reveals that the peace plan, being worked on by both Angela Merkel and Vladimir Putin, "hinges on two main ambitions: stabilising the borders of Ukraine and providing the financially troubled country with a strong economic boost, particularly a new energy agreement ensuring security of gas supplies."

Amusingly, this comes on the day when the WSJ leads with "On Hold: Merkel Gives Putin a Blunt Message. Germany's Backing of Russia Sanctions Marks Breach in Pivotal European Relationship" in which we read that " Angela Merkel spoke to Russian President Vladimir Putin for at least the 30th time since the Ukraine crisis erupted. She had a blunt message, according to people briefed on the phone conversation: Call me if you have progress to report in defusing the conflict. That was July 20. The two leaders haven't spoken since."

They may or may not have spoken since, but it is not because Putin has "no progress to report" - it's because the two leaders have come to a secret agreement which will hardly make Ukraine, or most of Europe, not to mention the UN, happy as it requires that Crimea be permanently handed over to Russia in exchange for Russian gas, which has been cut off for a month now due to non-payment by Kiev.

Here is how the deal came to happen:

Sources close to the secret negotiations claim that the first part of the stabilisation plan requires Russia to withdraw its financial and military support for the various pro-separatist groups operating in eastern Ukraine. As part of any such agreement, the region would be allowed some devolved powers.

At the same time, the Ukrainian President would agree not to apply to join NATO. In return, President Putin would not seek to block or interfere with the Ukraine’s new trade relations with the European Union under a pact signed a few weeks ago.

Second, the Ukraine would be offered a new long-term agreement with Russia’s Gazprom, the giant gas supplier, for future gas supplies and pricing. At present, there is no gas deal in place; Ukraine’s gas supplies are running low and are likely to run out before this winter, which would spell economic and social ruin for the country.

As part of the deal, Russia would compensate Ukraine with a billion-dollar financial package for the loss of the rent it used to pay for stationing its fleets in the Crimea and at the port of Sevastopol on the Black Sea until Crimea voted for independence in March.



To be sure, in the aftermath of the MH-17 shooting, which in light of this revelation would clearly not benefit Russia, negotiations have stalled they are expected to restart once the investigation has taken place. “It is in everyone’s interests to do a deal. Hopefully, talks will be revived if a satisfactory outcome can be reached to investigations now taking place as to the causes of the MH17 catastrophe."

But while Germany can't wait to put the Ukraine conflict behind it and restore normal Russian relations (see Adidas' record plunge earlier today, blamed on the Ukraine conflict) others are far more eager to stir the pot some more: "A spokesman for the Foreign and Commonwealth Office said they had no knowledge of such negotiations taking place. However, the spokesman said he thought it highly unlikely that either the US or UK would agree to recognising Russian control over Crimea. There was no one available at the German embassy’s press office yesterday."

Which, of course, goes back to the fundamental question behind the Eurozone experiment: just who calls the shots. And despite what the UK (and certainly France) believe, that one person was and continues to be Merkel.  And at the end of the day, pragmatic Germany knows that for all the posturing and rhetoric, the biggest loser from a western embargo of Russia (which is now actively shifting its attention to China and now India) would be Germany itself.

[S]trong trade ties between the two countries have also served to strengthen Ms Merkel’s hand and the Russian speaker has emerged as the leading advocate of closer relations between the EU and Russia. “This is Merkel’s deal. She has been dealing direct with President Putin on this. She needs to solve the dispute because it’s in no one’s interest to have tension in the Ukraine or to have Russia out in the cold. No one wants another Cold War,” said one insider close to the negotiations.

Some of Germany’s biggest companies have big operations in Russia, which is now one of Europe’s biggest car markets, while many of its small to medium companies are also expanding into the country. Although Russia now provides EU countries with a third of their gas supplies through pipelines crossing the Ukraine, Germany has its own bilateral gas pipeline direct to Russia making it less vulnerable than other European countries.

However, Russia is still the EU’s third-biggest trading partner with cross-border trade of $460bn (£272bn) last year, and the latest sanctions being introduced by the EU towards Russian individuals and banks will hurt European countries more than any other – particularly Germany, but also the City of London.

Curiously, if there is one entity that could scuttle the deal it is, no surprise there, the US.

Central to the negotiations over any new gas deal with Gazprom is understood to be one of Ukraine’s wealthiest businessmen, the gas broker, Dmitry Firtash. Mr Firtash – who negotiated the first big gas deal between the Ukraine and Russia between 2006 and 2009 – is now living in Vienna fighting extradition charges from the Americans. But he has close relations with the Russian and Ukrainian leaders – he supported Mr Poroschenko – and has been acting as a go-between behind the scenes at the highest levels.

Incidentally, the same Americans which over the past 2 years has been desperate to start a regional war in any one part of the globe in order to break some more windows and boost GDP courtesy of the tried and true "Military Industrial Complex" GDP boost. Which is why if indeed the Ukraine peace process is in the arms of the US, then perhaps Putin's advisor was spot on when he said that "There is a war coming in Europe." Compliments of the United States?

Finally, for those wondering how much of the Independent's story is a fabrication, here is Germany denying it all:

GERMANY: REPORT OF SECRET DEAL ON UKRAINE `TOTALLY UNFOUNDED'

Which, if Jean-Claude Juncker is any indication, seals it.

Prosecutor says strip search of India diplomat 'standard'

Devyani Khobragade, India's deputy consul general(Photo: Mohammed Jaffer, AP)

All this in the land of the "free and the brave"?  You know of course what will happen is they will put in a procedure to exempt diplomats and continue treat US citizens this way... but at least this incident exposes what has become routine in law enforcement in a very public way.  All secrets will be exposed... Eternal Essence is seeing to it.  And they asked "who will this be enforced?".... hahaha -AK


Prosecutor says strip search of India diplomat 'standard'
Oren Dorell, USA TODAY 10:34 p.m. EST December 18, 2013
AP India US Diplomat Arrest

http://www.usatoday.com/story/news/world/2013/12/18/india-diplomat-us-immunity/4108553/

STORY HIGHLIGHTS
Indian diplomat says she was subjected her to a strip-search, cavity-search and DNA swabbing
The case has sparked widespread outrage in India and infuriated the government
Indian diplomat was arrested on visa charges in New York City

The arrest of a low-level diplomat from India over maid pay in New York has spun into an international incident that is threatening relations between the United States and a longtime ally.

Secretary of State John Kerry called a cabinet official in New Delhi on Wednesday to express regret over the arrest of India deputy consul general Devyani Khobragade, who was stripped- and cavity-searched during her arrest on charges that she didn't pay her housekeeper enough money.

The India government reacted with outrage, going so far as to remove security barriers outside the U.S. Embassy in New Delhi and canceling duty-free liquor deliveries to the embassy.

Prime Minister Manmohan Singh described the diplomat's treatment as "deplorable" and protests have broken out in India.

"We don't want this to negatively impact our bilateral relationship (with India), and we'll keep talking about it with them on the ground and here," said Marie Harf, deputy spokeswoman at the State Department.

Khobragade said the U.S. Marshals Service subjected her to an intrusive search and DNA swabbing following her arrest last week outside her daughter's Manhattan school on visa charges despite her "incessant assertions of immunity."


But the U.S. attorney in New York, Preet Bharara, issued a long statement Wednesday evening saying she was treated well and provided courtesies most other defendants would not get.

He said U.S. Department of State agents arrested her discreetly last week, not in front of her children, and she wasn't handcuffed or restrained. He said she was "fully searched'' by a female deputy marshal in private and called it standard procedure for "every defendant, rich or poor, American or not."

In a response to the uproar, Bharara said she "clearly tried to evade U.S. law designed to protect from exploitation the domestic employees of diplomats and consular officers. Not only did she try to evade the law, but as further alleged, she caused the victim and her spouse to attest to false documents and be a part of her scheme to lie to U.S. government officials.''

Khobragade was arrested last Thursday on charges that she lied on a visa application about how much she paid her housekeeper, an Indian national. Prosecutors say the maid received less than $3 per hour for her work, far less than U.S. minimum wage laws.

Kerry told India's national security adviser, Shivshankar Menon, that while the U.S. government expects laws to be followed by everyone in the USA, "it is also particularly important to Secretary Kerry that foreign diplomats serving in the United States are accorded respect and dignity just as we expect our own diplomats should receive overseas," Harf said.

"I broke down many times as the indignities of repeated handcuffing, stripping and cavity searches, swabbing, in a holdup with common criminals and drug addicts were all being imposed upon me despite my incessant assertions of immunity," she wrote.

Khobragade was released on $250,000 bail but as a condition of her release must report to police in New York every week.

In India, fear of public humiliation resonates strongly and heavy-handed treatment by the police is normally reserved for the poor. For an educated, middle-class woman to face public arrest and a strip search is almost unimaginable except in the most heinous crimes.

India has retaliated against U.S. diplomats by not only revoking diplomat ID cards but demanding to know the salaries paid to Indian staff in U.S. Embassy households. India has also withdrawn import licenses that allowed the commissary at the U.S. Embassy to import duty-free alcohol and food.

In a dangerous move, police removed the traffic barricades near the U.S. Embassy in New Delhi that are designed to prevent attacks. India said the barriers clogged up traffic.

On Wednesday, dozens of people protested outside the U.S. Embassy, saying Khobragade's treatment was an insult to all Indian women. In New Delhi, the lower house of Parliament had to be temporarily adjourned Wednesday after lawmakers noisily demanded that it adopt a resolution against the United States.

BJP leader, Yashwant Sinha called on the government to expel all gay partners of U.S. diplomats, according to Indian newspaper The Hindu. Indian law considers homosexuality a crime, punishable by up to 10 years in prison for "voluntarily having carnal intercourse against the order of nature with any man, woman or animal."

Among those leading criticism of the arrest is Narendra Modi, a candidate for prime minister in upcoming national elections for the opposition Bharatiya Janata Party. Rahul Gandhi, the leader of the Nehru-Gandhi family leading India's ruling Congress party, is alos assailing the arrest, according to the Hindustan Times.

Both were among Indian leaders who snubbed a visiting U.S. congressional delegation over Khobragade's treatment.

AP India US Diplomat Arrest
Devyani Khobragade, India's deputy consul general(Photo: Mohammed Jaffer, AP)
Khobragade was apprehended by the U.S. Department of State's diplomatic security team and then handed over to the U.S. Marshals Service, which confirmed that it had strip-searched Khobragade and placed her in a cell with other female defendants. It described the measures as "standard arrestee intake procedures."

Prosecutors say Khobragade claimed on visa application documents she paid her Indian housekeeper $4,500 per month but that she actually paid her less than $3 per hour. Khobragade has pleaded not guilty and plans to challenge the arrest on grounds of diplomatic immunity.

Harf said Khobragade does not have full diplomatic immunity. Instead, she has consular immunity from the jurisdiction of U.S. courts only with respect to acts performed in the exercise of consular functions, she said.

The State Department notified India of allegations of abuse by the maid against Khobragade in September, Harf said. If convicted, Khobragade faces a maximum sentence of 10 years for visa fraud and five years for making a false declaration.

Arun Jaitely, leader of the opposition in the upper house, said the government had to register its "strongest protest" to the U.S. government for the "lack of respect for India." He called for a review of India's relations with the United States, a demand that was vociferously seconded by many lawmakers.

Contributing: William M. Welch, USA TODAY; The Associated Press