China Allows Gold Bullion As Collateral

China’s Shanghai Gold Exchange said it will allow physical gold to be used as collateral on futures contracts from September 29, according to a statement posted on its website this morning as reported by Reuters.

Physical gold will be permitted to be used for up to 80 percent of margin value, according to the statement.

Reuters then corrected the story and the second refiled story was changed and given a different focus:

The Shanghai Gold Exchange said on Thursday it will allow A-shares, exchange-traded funds and treasuries to be used as collateral for gold trading.

Reuters then corrected the story and the second refiled story was changed and given a different focus:

The Shanghai Gold Exchange said on Thursday it will allow A-shares, exchange-traded funds and treasuries to be used as collateral for gold trading.  The move comes as Beijing unleashes a slew of measures to stave off a collapse in its stock market and restricts trading in stock index futures. 

With counterparty and sovereign risk remaining high although unappreciated, gold is no longer being seen simply as a commodity – particularly in China, India and Asia. Rather, it is increasingly viewed by more astute market participants as an important asset and a currency with no counterparty risk.

Gradually, we are seeing the re-monetization of physical gold as it is being reincorporated into the modern financial and monetary system. Keynes’s ‘barbaric relic’ is becoming less barbaric by the day.

The development is an important one for the gold market and is bullish for the “pet rock.” It shows, once again, that gold is slowly but surely becoming a cash equivalent and as money again.

Gold’s re-monetisation in the international financial and monetary system continues.
Read the Reuters articles here and here

DAILY PRICES
Today’s Gold Prices: USD 1107.75, EUR 989.73 and GBP 720.32 per ounce.
Yesterday’s Gold Prices: USD 1122.30, EUR 1002.50 and GBP 730.38 per ounce.
(LBMA AM)

Gold fell 1.4% yesterday, the biggest loss in two months, to test support at $1,100 per ounce. It slid to $1,101.11, its lowest since August 11. Silver fell 1.1% and gave up some of its recent gains.


Silver in USD – 10 Years

Singapore gold was marginally higher and in early European trading gold has moved marginally higher again to $1,108 per ounce. Gold broke lower out of its recent trading range yesterday as technically driven traders liquidated positions.

Silver, platinum and palladium are all higher this morning too, outperforming gold. Silver’s losses yesterday were smaller than gold’s and this is encouraging the view that silver may have bottomed.

IMPORTANT NEWS

Gold at 4-week low as stocks rally, dollar rises – Reuters
Gold futures log lowest settlement in a month – MarketWatch
India’s Modi Moves Closer to Tapping Gold Hoard to Cut Imports – Bloomberg
Gold futures slightly lower, on track for a fifth straight losing session – MarketWatch
Gold ring found during roadworks in Ireland declared 12th century treasure – Independent.ie

IMPORTANT COMMENTARY

Something Just Snapped At The Comex (Updated) – Zero Hedge
Silver Bullion -NEW 100 oz poured silver bars to be available from Asahi – COINWeek
South African Gold on the Brink With Half of Mines Losing Money – Bloomberg
India’s gold monetization schemes met with skepticism – MINING.com
Druckenmiller, Soros, Icahn, Faber Like Commodities and Precious Metals – GoldSeek.com

Download Essential Guide To Storing Gold Offshore

Mark OByrne

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