Yuan-Denominated Gold Fix Begins Tomorrow

Mon, Apr 18, 2016 - 10:18am

Well, Y-Day is here! We've waited for years for the Chinese and their Shanghai Gold exchange to offer a competing Price "fix" to the existing structure out of London...and it all starts tomorrow! How will this impact the gold market? At what price will the Shanghai Fix come in?

By about 8:30 London time tomorrow 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!

The S&P futures did trade lower overnight, often looking 8-12 points down. But, in a stunning development, look at what has happened once the NYSE opened:

So what is the S&P tracking today? The USDJPY, of course! Again, it's as if the HFTs simply get flipped to whatever is going UP on any given day. If it's crude, they track crude. If it's the USDJPY, they track USDJPY. If it's neither, then VIX gets slammed and the HFT algos buy S&Ps because of it. It truly is remarkable and sickening to watch. Here's your USDJPY chart for the same time period as the S&P chart show above. Do you notice any similarities?

Anyway, turning to gold, we sure have been testing The Never, Ever, Ever, Ever Rule quite a bit recently...and I find that interesting. If you've followed the metals for a while, then you know that The London Monkeys usually attack price about 4 days out of five. Andy Hoffman calls this "The Cartel Herald" and it has literally been this way for years. However, over the past month or so, it seems like The London Monkeys only attack about one day out of three...leaving all of these tests of The NEEE Rule. So what's the deal? Are The London Monkeys being forced to stand down due to all of the investigations and lawsuits? Is it simply that physical demand os so strong that The Monkeys are unable to overcome it? I don't know for sure but any type of pattern change always grabs my attention and this certainly seems like a change of pattern/behavior.

After rallying then being slammed lower overnight, gold got to $1243 earlier this morning but is now back to a $1235 last. Whatever. At least it's not down $20 AND it is still holding above its 50-day MA, which today is near $1235. Keep your eyes on this level and then we'll wait to see what tomorrow brings.

And silver remains resolute and holding firm above $16.20...even after is was deliberately rigged lower and away from a possible breakout back on Friday. Again, we'll have to see what the rest of the day brings but, with a clear emphasis being placed upon spiking the USDJPY and, by extension, the "stock market", we may continue to see rigging pressure back toward $16.

We've got a lot to do this morning so I think I'll shut this down here and get it posted. Be sure to check back later today, though, for the usual full podcast summary and review.


About the Author

turd [at] tfmetalsreport [dot] com ()


Apr 18, 2016 - 10:22am


Tomorrow will be interesting or it will not, however if it is

All I can say is

Video unavailable


Danforth Coxwell
Apr 18, 2016 - 10:26am



Apr 18, 2016 - 10:30am

PM price

I am so thrilled to see that the price of PM is now free to market forces, now that DB has admitted to manipulation.

/sarc off

Apr 18, 2016 - 10:47am

Top 5

Go SGE!!

J Siefert
Apr 18, 2016 - 10:48am

Is it known

...where we can see quotes from the SGE?

Edit: Found it myself...

Apr 18, 2016 - 10:50am


There's so much to talk about today that it's hard to know where to dig in. All the headline info is bad enough as it relates to the imploding economic system but this little tidbit caught my eye this morning...

Deutsche Bank head of Global FX Arinc Said To Be on Leave


"Deutsche Bank AG’s head of global foreign exchange, Ahmet Arinc, is on leave, according to people with knowledge of the situation."

"The world’s biggest lenders generated $9.5 billion in revenue in 2015 from helping clients buy and sell the world’s most heavily-traded currencies, an increase of 19 percent on the previous year, according to data from Coalition Development Ltd. Deutsche Bank was the world’s second-biggest trader of the products after JPMorgan Chase & Co., the data shows."

"Deutsche Bank is the biggest global foreign-exchange trader that hasn’t reached a deal with the U.S. Department of Justice to settle allegations that its traders were among those that conspired to rig currency rates. JPMorgan Chase, Citigroup Inc.’s Citicorp and four others agreed to pay a total of $5.8 billion and enter guilty pleas in connection with the currency-rigging probe."



Deutsche Bank is the "second biggest trader in the product" and JP Morgan is the first. So here's my question:

If Deutsche Bank has massive losses in their FX derivative book and currently is on a banking "death watch" how many of those contracts have JP Morgan as their counter-party and what happens to JPM if Deutsche Bank goes under?

It's getting hot out there!

May the Road you choose be the Right Road.

Bix Weir


For more info on the Deutache Bank debacle here's a search on the RoadtoRoota website:


J Siefert
Apr 18, 2016 - 10:57am


According to the clocks on their home page the time in China is the same as the time in Switzerland. smiley

Apr 18, 2016 - 10:58am

I kinda agree

I think the Yuan fix is a non-event, and I certainly don't herald this as the cure to all that ails (but I hope I'm wrong!). Why would we assume that the Chinese would want things to be any more honest than their London counterparts? Self interest? Are we sure that they are done accumulating at low prices? The list of names associated with the new exchange doesn't give me a warm fuzzy that literally anything will change by this.

Apr 18, 2016 - 11:00am


Of course if the Chinese are into involved in the pms price manipulation they may keep them lower for longer using Sge?

Apr 18, 2016 - 11:00am


Added to the stack this morning, couldn't wait for the pullback that may never come. Armstrong's benchmarks, whirlybirds, and cycloops have come and gone with no plunge, BoBaloney is dead wrong (timing) on the spike to heaven, and tons of underlying angst brewing. Time to set it aside and prepare quietly. Thanks Craig for the daily reminders, guidance, and encouragement.


Apr 18, 2016 - 11:03am


whatever happened to the ground shaking ABX thingy? Any word out of AMaguire or Coughlin?

chirp chirp

Nick Elway
Apr 18, 2016 - 11:04am

I told the people I was

I told the people I was traveling with we were looking at the world's financial center.


They said "huh?"

Apr 18, 2016 - 11:18am

18th April and still 2,198

18th April and still 2,198 April contracts to be settled - efficient market the comex isn't it... lol

Apr 18, 2016 - 11:30am

Tommorrow is a very big day for us

It could be the turning point. Slowly, of course as not to cause a nose bleed from reaching altitude too quickly.

Apr 18, 2016 - 11:38am

Chinese domestic gold consumption.

Since we're talking all things Chinese, I thought I'd clear up a bit of a misnomer going about.

The Chinese Gov't and well-heeled billionaires are purchasing huge amounts of gold. I have bought a few Pandas there myself. But, 95% of Chinese are not interested in gold. They purchase real estate and businesses. The average Chinese is not gold-centric like say the Indians are. I am married to a Chinese woman, and travel on business to China regularly.

Mind you, only a small percentage of Chinese own Beamers and Mercs, but on any given day, you will see more than in any western city. It's a numbers game.

Apr 18, 2016 - 11:51am

Not sure Fandango

Scroll down the article to see the pictures.

These people don't look like the 5%.


Apr 18, 2016 - 11:51am

China will

mirror what's happening in London or the Comex for now. Legitimacy in my opinion comes later when China reveals it's true intentions. Timing is everything...They'll wait out the Saudis threat to dump US treasuries. If the US does put forth the 9/11 papers, and Saudi Arabia is implicated in any way, there's a very good chance that the US will not only get a load of treasury bonds thrown over the treasury's transom, but we'll likely lose the petrodollar as well...then it's game on... China could then further the dollar's damage, and unveil a gold backed yuan giving the rest of the world an alternative to dollar dominance...it's brilliant but sad in the same breath. Life in the US would change overnight.

One thing seems certain...Something big is happening and it could very well be that these events are being orchestrated. Eerily we see one financial truth after another now coming in rapid succession. It's getting tougher and tougher to keep the pot from spilling over. Truth is not difficult unless it has the capability of bringing the entire financial system to its knees. I pray that somehow all this can be avoided

Apr 18, 2016 - 12:08pm

Yuan Fix + Delivery Capability = Chinese Control of the Dollar

I think most people realize how that logic chain plays out so I won't elaborate on it here, but that is a very powerful tool/weapon and I don't expect they'd unholster it here when they can assuredly use it to extract years of concessions by the mere threat of its existence.

The fact that they have that weapon and it they know WE know they have that weapon means that nothing has to change in the spot market. Subtle threats and the occasional "shot across the bow" LBMA / SGE arb to the upside should suffice to effect any policy goals the Chinese wish to achieve.

Additionally, the Chinese are not on the side of the Gold Bugs - they are on the side of the Chinese Government. If a higher price serves their interests then we will be rooting for the same horse, but we are not on the same team. Moreover the Chinese have a history of measured moves that lead to big change as opposed to sharp policy changes; we are seeing those measured moves now and I believe tomorrow is one of the bigger ones - which also makes me believe they wouldn't want to add to it via a huge gold price disruption.

Ultimately I find myself siding with Bill Murphy quite a bit on what it will take to break the banks on this one, and that is when delivery can no longer be satisfied and there is an institutional realization that there is no good to buy at the current prices. Not to diminish the significance of tomorrow's events at all - they are just another straw (albeit maybe a larger one, but a straw nonetheless) on the back of the Camel.

....Hopefully I'm totally wrong and the Chinese decide to go expert-level Machiavelli and surprise everyone with liftoff tomorrow. laugh

J Siefert
Apr 18, 2016 - 12:10pm


Max Keiser talks to Tom Coughlin
in the second half of the video.

Keiser Report: Planning is everything (E898)

Edited: Wrong video now corrected.

2nd. edit Now it's the right one

Apr 18, 2016 - 12:11pm


Something big is happening and it could very well be that these events are being orchestrated.

they are

Apr 18, 2016 - 12:12pm

It's open and running

It's just a process now of getting market participants to use it. See the MK video linked above.

peterww jwmkratz
Apr 18, 2016 - 12:18pm

It's all about the dollar

I agree, jwmkratz. The importance of the new Shanghai Benchmark Price (SBP) is less to do with the price of gold than it is to do with the dollar. The G-20's objective remains to rectify the imbalances in the global system which led to 2008. The primary tool in effecting this re-balancing will be the adjustment of exchange rates. The SBP is the last duck which the G-20 needed to get in a row before the adjustment began in earnest. From tomorrow onwards, the adjustment process will accelerate until the dollar's international purchasing power has fallen around 30% by 2020. The Chinese were never going to let their currency float while the Americans had control of the gold market.

The SBP is a tool to manage a controlled descent for the dollar.

By the way, if I understand correctly, the SBP will be a twice-daily fix beginning at 10.15 am and 2.15 pm local time: https://www.en.sge.com.cn/news-announcement/announcement/537284.shtml

J Siefert
Apr 18, 2016 - 12:19pm

And yet

...the Chinese will not want to acquire the same reputation that the COMEX has. That means they must not be seen to be manipulating the gold price.

Fandango Orange
Apr 18, 2016 - 12:27pm


I'm an Aussie, do most of my business in Guangzhou (3rd largest city in China). The city has a population almost the same as Australia's entire population. I spent a stretch of 3 months there a couple years back... That queue looks like the local supermarket. Five % of a billion+ is a good#. They will buy the gold, also Gov't.

No social security, no food stamps, no healthcare, no unemployment benefits. People save, rely on their relations, look after parents, purchase property, buy businesses. Necessity dictates cultural norms.

Apr 18, 2016 - 12:41pm


China is a Libertarian paradise, with a Chairman Mao hangover.

Apr 18, 2016 - 12:45pm

Need some education on SGE

Probably discussed in Turdvilled before, but how will the SGE function.

Will there be oceans of paper gold contracts setting the price or will it be tangible physical trades setting the price. It is an exchange, but what is going to be exchanged?

Thanks in advance.

Apr 18, 2016 - 12:47pm


Thank you for providing your insight. Always good to have people either on the ground or locals to interpret what is really going on.

I also just noticed you only recently joined Turdville. Welcome aboard.

Perhaps your wife can recommend the site to any Chinese friends that speak English and still live there.

Apr 18, 2016 - 12:58pm

April 18, 2016 Sovereign

April 18, 2016

Sovereign Valley Farm, Chile

It was early spring in 1971 when an obscure American folk singer wrote a song that would change his life forever.

Sitting at a café in Saratoga Springs, New York, Don McLean scribbled the lyrics to a long ballad about an experience he had as a 13-year-old boy.

It began with a radio bulletin that said that Buddy Holly had died in a plane crash. The boy was crushed. But the man used this emotion to write a song that would take the world by storm.

Of course, that song was “American Pie.”

It stayed atop the Billboard music charts for more than a year. And it turned this once obscure folk singer into a global sensation.

More than that – McLean was immediately set for life: he still makes more than $300,000 a year from that song.

Imagine getting paid hundreds of thousands of dollars a year for something you did in 1971!

This story holds the key to one of the greatest business model ever invented: the idea that you can create something once and get paid on it for life.

It’s the royalty business.

In case you’re not familiar with the term, a royalty is a cash payment that you receive over and over again from an asset that you created, developed, or own.

For example, songwriters collect a royalty every time a song they write is played, purchased, downloaded or streamed. That’s why McLean still makes money from American Pie.

Royalties are also common in natural resources. Royalty companies often provide financing to oil and mining companies… and those borrowers pay a royalty on every ounce of gold or gallon of oil that the land produces.

Authors earn a royalty every time somebody buys their book. Inventors receive royalties from their patents.

And people who own royalties don’t have to do anything else to make money… except cash the checks.

The powerful cashflow of this model can be incredibly appealing to investors, and there are even some companies that specialize in acquiring assets that produce royalty income.

In his November 2014 edition of Price Value International, for example, Tim Price recommended a company called Franco-Nevada Corporation that specializes in gold-focused royalty income.

Back then it was very cheap, and Tim’s subscribers have made nearly 50% including both dividends and gains in the stock price… far outpacing most traditional gold miners.

There’s another company called Mills Music Trust still that has an impressive yield of 10% (i.e. the amount of annual dividends it pays to its shareholders is roughly 10% of the stock price).

That’s an amazing yield. But good luck buying shares-- the stock has a market cap of just $5 million in the OTC market, and the shares rarely trade.

One of the things I really like about royalties is that they’re REAL assets that produce income, just like agricultural property or a profitable private businesses.

In times of inflation, the value of your asset goes up, thus protecting your savings.

In times of deflation, the cashflow that the asset produces is extremely valuable.

But the real potential with royalties isn’t with publicly traded stocks-- it's in owning private assets that generate income… like American Pie.

It used to be very difficult to do this; owning royalties meant you had to know someone, or be in the business.

Agents, managers and record labels bought royalty rights from singers and songwriters like Don McLean.

But if you weren’t part of the music business, it was very difficult to get in on these types of lucrative cash cows.

Fortunately the entire financial system is changing.

Modern technology has made it possible to bring together people like Don McLean who own royalties, along with investors who want to buy royalties.

It’s a similar concept to Peer-to-Peer lending platforms that match borrowers and lenders, or crowdfunding sites that match entrepreneurs with prospective investors.

It’s no longer industry insiders and big banks that have the deals all to themselves.But today I don’t want to talk about buying royalty companies. I want to talk about an exciting new opportunity that allows you to buy royalty assets directly from the creators and current owners.

You can cut out the middleman and collect these rich cash royalties yourself.

Now, as an artist or patent holder, you can go to a website and offer a portion of your intellectual property to sell to an investor.

And as an investor you can shop for any number of royalty-producing assets.

For example, RoyaltyExchange.com recently auctioned off another music royalties from iconic bands like the Bee Gees and Eurythmics.

(One recent songwriter royalty sold for 7x last year’s earnings, which translates to a yield of roughly 14%.)

The site is currently auctioning a share of the royalties from comedy films like Dumb & Dumber, and There’s Something About Mary.

That’s the other exciting about royalties based on copyright. Unlike patents, which usually last for 10-20 years… copyright royalties last for much longer… up to 70 years after the death of the creator. That’s why you see popular songs like “Happy Birthday” earn millions of dollars of royalties every year for more than 50 years.

It means that whenever these movies are rented or played on TV stations around the world, the royalty owners get paid.

It’s like being a toll-collector on the pop-culture highway, so the potential is quite interesting. And these photos have another 50+ years of copyright left on them… so if you buy them… you could be getting paid until 2066! (These are the types of assets that could pay for your grandchildren to go to college.)

As we discuss frequently, part of being a Sovereign Man is having income independence. This means owning or creating valuable assets that produce independent cashflow.

Again, this could include assets like real estate or private businesses.

This is an incredibly important part of the “Plan B” strategy we always talk about. And owning royalty-producing assets may make sense for you to consider as part of that.

Until tomorrow, 

Simon Black

Founder, SovereignMan.com

Fandango Orange
Apr 18, 2016 - 1:02pm


Thanks mate, I appreciate your welcome. Was lurking on-off for a couple of years. Really enjoy TF's podcasts and the community atmosphere of this site.

I will share this site with contacts in China. The more flavour, the better!

James Crighton Fandango
Apr 18, 2016 - 1:04pm

Fandango - 12:41

Fandango - is income taxed in China? If not, when's the next plane!


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