Russia & China Setting The Stage for Gold to Move Higher with Physical Gold Trade
Russia & China Setting The Stage for Gold to Move Higher with Physical Gold Trade by Rory – The Daily Coin
This is one of the pieces of the monetary puzzle we have been awaiting.
Russia and China, over the past decade, have been in the headlines around the world with the variety of moves involving physical gold. Now we learn the BRICS nations, which either produce vast amounts of gold or consume vast amounts of physical gold, may make a move to set the global exchange rate for gold. With gold being money, but being considered a commodity, the “price” of gold is actually an exchange rate the same as any other currency.
Since Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold, or both, it is highly likely that the BRICS bloc they constitute could focus its cross-border gold trading network on trading physical gold.
Gold pricing benchmarks from such a system would be based on physical gold transactions, which is a departure from the way the international gold price is currently established.
“We (the Central Bank of the Russian Federation and the People’s Bank of China) discussed gold trading,” he said. “The BRICS countries (Brazil, Russia, India, China and South Africa) are major economies with large reserves of gold and an impressive volume of production and consumption of the precious metal. In China, gold is traded in Shanghai, and in Russia in Moscow. Our idea is to create a link between these cities so as to intensify gold trading between our markets.” Source
Actually, gold trade between Moscow and Shanghai would be strengthened since the two nations are already moving gold from Russia to China through the Central Banks for each of the nations.
VTB Bank, Russia’s second-largest lender, said on Tuesday:
* VTB plans to supply 15-20 tonnes of gold to China in the next 12 months;
* VTB plans to continue increasing gold supplies to China, the exact volume of supply is subject to demand in the region;
* In April, VTB said it aimed to supply between 80 and 100 tonnes (2.57-3.22 million troy ounces) of gold to China per year;
* In the second quarter of 2016, VTB dispatched its first batch of gold to China, becoming the first Russian bank to start direct supplies of physical gold to the world’s largest buyer and consumer of the precious metal. Source
With all the agreements, alliances and banking and financial institutions China and Russia have built or formed it is extremely difficult to keep up with everything they have put together. One of the items that has slipped through the cracks over the past couple of months if the fact that China is now going to be mining gold in Russia. Is the gold that will be mined by China in Russia part of the 80-100 tons Russia is planning on supplying to China or is will this tonnage be completely separate? What is crystal clear is physical gold is very, very important to these global powerhouse nations.
During the final day of the MINEX Far East 2017 forum, the government of Russia’s Magadan Region signed an agreement of intent on cooperation with the China Gold Association.
According to a release cited by RIA Novosti, “the protocol implies bilateral intentions to develop cooperation and facilitate investments in mineral exploration and extraction between Magadan Region and China.”
“Earlier constructive negotiations were held with the Chinese delegation, and a number of mineral extraction projects, including gold mining, were reviewed. The regional administration head specifically pointed out that this agreement of intent on cooperation will become the basis of fruitful work,” the release says. Source
With this new mining production agreement, seemingly in place, will this gold production be counted as part of Russia’s annual gold minting production numbers that are reported to the World Gold Council? I somehow doubt Russia’s reported gold production is going to rise from their 250 tons of annual production. Why would Russia or China report this gold when it is not necessary?
A threat to the London Gold Market
The new gold pricing benchmarks that the Bank of Russia’s Shvetsov signalled may evolve as part of a BRICS gold trading system are particularly interesting. Given that the BRICS members are all either large producers or consumers of gold, or both, it would seem likely that the gold trading system itself will be one of trading physical gold. Therefore the gold pricing benchmarks from such a system would be based on physical gold transactions, which is a departure from how the international gold price is currently discovered. Source
The facts are this – Russia and China are setting the stage for regional, and possibly international, gold trade and possibly international trade settlement using gold. The weak link in the BRICS gold fortress is Brazil. Brazil neither produces nor consumes a significant amount of gold. China and Russia have vowed to assist the other BRICS nations in their acquisitions of physical gold. It would make sense that Brazil would be at the top of this list, since Brazil is not even in the top 20 nations for gold reserves. Translation – Brazil has fewer than 280 tons of physical gold.
The global gold reserves chart below is current as of June 2017 – Click chart to enlarge
We have been reading report after report about Russia, China and physical gold. We are reporting as much of the information as we can get our hands on. As I stated earlier in this report, the information is coming fast and furious which makes it a challenge to keep up. These policy changes are extremely important to all us as China and Russia have made it all too clear their desire to move away from the world reserve currency system based on the Federal Reserve Note and Russia has actually said the Federal Reserve Note is a “threat to their economic sovereignty” stating:
“This is a security matter. The Russian payment system needs to be independent, allowing us to live without fear of being hit by sanctions and getting our accounts blocked; it should allow us to use our money without having to worry about processing centers located beyond our country’s borders,” Zubets explained. Source
Deputy Governors of the People’s Bank of China and Bank of Russia
sign Memorandum on Gold Trading, Sochi, September 2017.
Photo: Bank of Russia – Source
For those that still believe Russia and China are somehow not setting the stage for gold trade please do a little more research as everything just in this information presented here should leave little room for doubt that some major changes are in the works and developments are beginning to mature. When these changes will be fully developed is still unknown but the timing seems likely between today and possibly as early as 2023.
Keep strong, keep stacking and we will be publishing more solutions that will allow us all to better protect ourselves in similar fashion as these global powerhouses. We should not be left out in the cold as the U.S./U.K/EU. continue their downward spiral – we do not have to “go down with the ship”.