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Old 02-13-2012, 11:40 AM   #1
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Arrow Shanghai Gold Exchange (SGE) [NOT equal to PAGE!]

First of all, the Shanghai Gold Exchange (SGE) is NOT equal to the Pan Asian Gold Exchange (PAGE) ( http://www.pmbug.com/forum/f2/page-p...une-2012-a-12/ ) which is located in Kunming City.

Here is a summary on the operations of the SGE: http://www.sge.sh/publish/sgeen/sge_...rview/7216.htm

Recent news, they're trying to compete with the LBMA:
Quote :
Shanghai Gold Exchange eyes OTC trading
* SGE plans to launch OTC trading on interbank market
* Gold ETFs, palladium in early planning stages
* Aiming to extend night-time trading this year (Adds details)
By Fayen Wong and Lin Qi
SHANGHAI, Feb 13 (Reuters) - The Shanghai Gold Exchange (SGE) plans to launch over-the-counter gold trading and is in talks with the China Foreign Exchange Trade System to conduct these trades via the interbank market, an official from the exchange said on Monday.
The exchange also has plans to start exchange-traded-funds (ETFs) for gold to tap rising demand in China. It was also considering rolling out palladium contracts, although preparatory work for both products was still in the early stage.
"We are working with the China Foreign Exchange Trade System to study ways in which we can work together and start an interbank trading market for gold, that will be conducted outside of the exchange," Gu Wenshuo, president of general office at the SGE, told Reuters.
The Chine Foreign Exchange System (CFETS) is a unit of the People's Bank of China which provides trading systems for foreign exchange, bond, yuan lending as well as exchange rate and interest rate derivatives.
An interbank market is a wholesale market where banks trade between themselves in order to remain liquid and meet customer demands for deposits, withdrawals, and borrowing for many different purposes.
Having an over-the-counter (OTC) market would allow clients to trade in large quantities that far exceed the SGE's existing capabilities.
Currently, members who need to trade hundreds of kilograms of gold current have to break up their trades into numerous lots, which prohibits them from fixing a favourable price since such large number of transactions could distort prices.
Gu said rolling out OTC trading via the interbank market platform would be quiet easy, since the exchange's members are already familiar with the gold market and trading among themselves through such a platform.
The existing interbank trading platform would only need minor system upgrades to accommodate a new product, he added, but the SGE was still trying to iron out specification and delivery.
"We are working with market participants and looking at how we can resolve the warehousing and delivery issues," Gu said.
Unlike trading on the SGE, which standardises the specifications of gold bars and location for delivery, the characteristics of gold bars for delivery may differ in an OTC market, especially since some of the smaller Chinese banks are not SGE members.
NIGHT-TRADING, ETFS, NEW PRODUCTS
SGE, the country's only physical precious metals exchange, also said it was aiming to extend its night trading hours this year to meet growing client demand.
The exchange may either extend its night trading for gold and silver contracts by an hour to 03:30 a.m. local time (1930 GMT) or include Friday in its night trading hours.
Gu said the exchange was also looking at launching new products, especially gold ETFs, as such products have seen explosive demand from investors overseas.
When asked if the exchange was also looking to introduce gold options, Gu said the conditions were not yet favourable as China's overall financial market was still relatively immature.
The SGE is the world's largest spot gold exchange and the total volume of gold traded in 2011 rose 23 percent from the preceding year to 7,485.5 tonnes. Total transactions on the exchange, including silver and platinum contracts, jumped 120 percent to 4.44 trillion yuan ($704.92 billion). ($1 = 6.2986 Chinese yuan) (Editing by Miral Fahmy)
http://www.sharenet.co.za/news/Shang...ed440722d35d98
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Old 02-14-2012, 12:01 PM   #2
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Asia seems to be getting more and more aggressively in to precious metals. When you turn on 1.3 billion peasants to the idea that they can protect the value of their money by purchasing gold and silver.......watch out!
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Old 02-14-2012, 03:02 PM   #3
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I am curious what people think about this whole paper vs physical theory. Seems like the freegold people Another et al seem to talk a lot about this. Perhaps I don't understand it well enough. I spoke with a pretty knowledgable person who works with the LBMA everyday who has all his savings in gold and he seemed to dismiss these conspiracy theories. Saying there is a spot mkt and futures mkt, that is how commodities trade. so you can buy or sell spot and take ownership immediatley. Just curious what you guys think.

Also where do these people plan to sell their gold that they say will be priced differently than what is on the compt screen. To whom will they be selling? And why would the person take a different price than is on kitco etc?
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Old 02-14-2012, 04:14 PM   #4
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See NNL's "tail wagging the dog" explanation in the PAGE thread (1st post, 2nd & 3rd quoted paragraphs).
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Old 02-14-2012, 04:22 PM   #5
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Originally Posted by escobar View Post:
I am curious what people think about this whole paper vs physical theory. Seems like the freegold people Another et al seem to talk a lot about this. Perhaps I don't understand it well enough. I spoke with a pretty knowledgable person who works with the LBMA everyday who has all his savings in gold and he seemed to dismiss these conspiracy theories.
Does he have his gold in an unallocated LBMA account?
Because then it's just a bunch of

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Old 02-14-2012, 04:35 PM   #6
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SA,
Can you post a better video? The audio on that one is absolutely abyssmal. I listened to about the half-way point, then it sort of gets really quiet, and you can't really hear. Although I followed this on GATA, I can't remember seeing this particular video with AD.
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Old 02-14-2012, 04:40 PM   #7
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Originally Posted by ancona View Post:
SA,
Can you post a better video? The audio on that one is absolutely abyssmal. I listened to about the half-way point, then it sort of gets really quiet, and you can't really hear. Although I followed this on GATA, I can't remember seeing this particular video with AD.
I'm using headphones, maybe that will help you.
I don't have a youtube account and I'm not used to edit sound/videos, so that's the best advice I can give you
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Old 02-14-2012, 06:07 PM   #8
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my question though is if this disconnect develops between 'paper' and physical gold prices where and to whom will you sell your gold and who will determine the price? How will you know what the mkt price is?
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Old 02-14-2012, 06:16 PM   #9
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Originally Posted by escobar View Post:
my question though is if this disconnect develops between 'paper' and physical gold prices where and to whom will you sell your gold and who will determine the price? How will you know what the mkt price is?
Local bullion dealers and the internet will set prices. The (fraudulent) exchanges will be bypassed. Markets always find pricing mechanisms.
It happened in 2008 by the way: The silver price at the COMEX fell down to arround $9. Dealers arround the world weren't offering silver for less then $10.
I have a contract with one of Switzerlands biggest dealers that he has to sell me silver (and gold) at COMEX spot (+ a fixed premium depending on the amount I order) whenever I call. So I'm prepared to take advantage if/when paper/physical spreads emerge once again.
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Old 02-14-2012, 08:21 PM   #10
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yeah i guess that is possible. although since these current price providers are profit seeking organizations i think they would find some way to get closer to real prices or risk their business disappearing. The profit motive may push them back in line.

On a different note was curious what you guys thought about Buffett's comment in his recent letter on bond, gold and stocks. specifically his pt that you need new money to come in to buy the new mining supply and scrap every yr just to maintain equilibrium prices. as a result as prices go higher you need an ever increasing amount of money to just maintain the price forgetting about appreciation.

I disagreed with most of what buffett said but I did feel like this pt was noteworthy. Curious any thoughts on it.

Thanks
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Old 02-15-2012, 07:00 AM   #11
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When the paper markets disconnect, price discovery for metals will happen the same way it does for most everything else. Supply and demand will drive the price that owners are willing to sell and buyers are willing to pay.

On Buffet's point, silver demand has far exceeded global mining output for many years now from what I understand. The world has been eating away at above ground reserves and this is part of the story that excites the pumpers about it's future potential.

Also, an "ever increasing amount of money" seems to be the whole problem driving precious metals in the first place. Central banks are locked in to their ZIRP and QE gameplans.

However, the precious metals markets are super tiny - puny if you will - in comparison to the money trading in other vehicles. Buffet's comment belies an assumption that the status quo doesn't change. A rather modest shift in the investing mindset of pension/bond/hedge funds to secure a 5% position in gold and silver would cause a *huge* price dislocation to the upside.
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Old 07-19-2012, 09:35 AM   #12
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Quote :
China has proposed to expand trading of precious metals to its vast interbank market from designated exchanges, in a bid to boost liquidity and help Beijing gain better pricing power amid growing appetite for commodities such as gold, the Wall Street Journal reported.

Citing a person involved with the matter, the Journal said on Wednesday the Shanghai Gold Exchange (SGE) has released draft rules for such interbank trading, which will include spot, forward and swap contracts for precious metals.

Chinese authorities plan to launch the interbank trading on Aug. 31, according to the draft rules jointly developed by the SGE and the China Foreign Exchange Trading System, a unit of China's central bank, the Journal said.

Currently, participants can only trade precious metals contracts on the SGE and the Shanghai Futures Exchange.

The authorities will introduce a "market maker" system for the planned precious metals trading with transactions done on an over-the-counter basis compared with the exchange-based pricing mechanism, the Journal said.

The move will make gold the first commodity to trade on the interbank market.
...
More: http://in.reuters.com/article/2012/0...8IIDWC20120718
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Old 07-19-2012, 11:26 AM   #13
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The biggest part of this is that the BANKS are going to be taking part in all this. People who are short China (and their banking system) are going to be in for a rude awakening when suddenly it's revealed that they are sitting on vast amounts of gold. I mean, where do these people think all that gold is going to? The general public? lol
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Old 11-13-2012, 09:42 AM   #14
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SGE is a bit late with their interbank market, but still working on it apparently:
Quote :
...
The Chairman and President of the Shanghai Gold Exchange told the LBMA gathering that the Shanghai Gold Exchange will launch an interbank market early next month that will initially begin with spot contracts and will gradually offer forward contracts.

All banks trading on the China Foreign Exchange Trading System and National International Funding Centre will eventually be able to trade in the market, including foreign banks, Wang Zhe, chairman and president of the Shanghai Gold Exchange (SGE).
...
http://www.zerohedge.com/news/2012-1...llocation-rise
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Old 03-07-2013, 09:44 AM   #15
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Not sure what the consequences of that on prices will be. It might move pricing power to China, but it also might stop the overnight meltups.
Quote :
China's SGE to launch after-hours trading in Gold,Silver
The extended trading hours will bridge the gap between domestic investors and foreign markets, and will align the exchange with international practices, according to an SGE statement.

SHANGHAI(BullionStreet): In yet another attempt to gain further foothold in global futures trading, China's leading commodities exchange, the Shanghai Futures Exchange said it would launch after-hours trading this year including in gold and silver.

The exchange said it will further boost its international ambitions by expanding the list of futures contracts in the coming years, including crude oil.

The extended trading hours will bridge the gap between domestic investors and foreign markets, and will align the exchange with international practices, according to an SGE statement.

The Shanghai Futures Exchange has 10 trading categories, including gold, silver, copper and aluminum.

Analysts said the move will allow market participants to hedge and adjust their positions after breaking news emerges in the United States or Europe, thus reducing price volatility.

SGE now trades from 9 am to 11:30 am and from 1:30 pm to 3 pm Beijing time.

China is also positioning its futures markets to become major players, and shape the global prices for metals, energy and farm commodities as this will give Chinese traders a direct role in valuing the contracts, and will help the country to be less at the mercy of markets elsewhere, they added.

China is a heavy user of industrial and agricultural commodities, such as oil, copper and aluminum. But with an isolated futures market, the country has little say over global prices.

Aside from the Shanghai exchange, China has three other commodities bourses: the Dalian Commodity Exchange in Liaoning province, the Zhengzhou Commodity Exchange in Henan province, and the China Financial Futures Exchange in Shanghai.
http://www.bullionstreet.com/news/ch...oldsilver/4241
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Old 07-11-2013, 10:12 AM   #16
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Quote :
In the next part of our on-going look at the global gold market we now turn our attention to the Shanghai Gold Exchange. An exchange which has received more interest of late, than any other in the world of gold and silver.
...
Given the significant rise of gold exports from Hong Kong to China, 68% yoy, this is a timely and informative research piece which shines a spotlight on the Eastern gold market in a time when many are declaring the end of the gold bull market. Given the huge demand for physical and reportedly high premiums on the gold price, we ask if this market may well be a better indicator of gold demand, and subsequently true gold prices, than either COMEX or London.

We do not yet believe that the SGE will become a gold price driver, but the significant volumes and deliveries seen on the exchange suggest that its role in gold price discovery will become significant…, if it is not already.
...
More: http://therealasset.co.uk/chinese-gold-market/

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Old 07-11-2013, 11:18 AM   #17
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SGE deliveries alone are equaling mine production...
http://www.24hgold.com/english/news-...or=Jan+Skoyles

How long can the paper pushers support the massive about of physcial delivery going on in China?
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Old 07-11-2013, 05:29 PM   #18
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The chart below shows the Shanghai monthly physical deliveries vs monthly world gold mining supply.

In the last two months, Chinese demand for physical delivery all by itself is nearly equal to total worldwide gold production. Couple that with the graphs we have seen showing miners are loosing money at the current spot price of gold. Some has to give, and that something is the price of gold, upward.



http://moneymorning.com/2013/07/10/i.../#.Ud8icHddB8F
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Old 07-11-2013, 06:14 PM   #19
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Wow !

The miners really ought to be stockpiling or mothballing.
It makes no sense to be selling below production costs into a wrongly priced market with huge demand.

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Old 07-11-2013, 09:59 PM   #20
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Originally Posted by Unobtanium View Post:
The chart below shows the Shanghai monthly physical deliveries vs monthly world gold mining supply.
Wow indeed! I have only two words for that: "F..k me"! I might actually start to bite here a little. That's just INCREDIBLE demand, and from China ALONE!?!?
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