Shanghai Gold Exchange (SGE and SFE) gold and silver

[pmbug]

Re: post 119

 

[searcher]

 

[nickndfl]

Probably open to local currencies.

 

[WinkWink]

 

[pmbug]

I posted news about SGE expansion in Saudi Arabia in the tin foil hats thread starting here:

Post in thread 'Tin Foil Hats, Economic Reality and the Total Perspective Vortex'

Jul 25, 2025

This is HUGE news that is getting no play in western financial media (via Google translate):

...
According to the Shanghai Gold Council, the Shanghai Gold Exchange has made important progress in the coffers of Saudi Arabia and Hong Kong. On May 8, 2025, the Saudi delivery bank of the Shanghai Gold Exchange was officially opened to realize the "two-way free exchange" of the RMB and gold, and at the same time, it also facilitated the direct participation of Middle Eastern investors in Shanghai gold trading through the Saudi Treasury. On June 26, 2025, the Shanghai Gold Exchange officially...

• pmbug

~~~

Unconfirmed rumor via Andrew McGuire:

 

[nickndfl]

Plus they are using Embridge to process transacrions which are completed in minutes rather than days on the SWIFT and at 98% less exepnse.

 

[pmbug]

I asked Grok:

Q: "If China were to conduct all of their international trade in RMB, and trade partners wanted to convert 80% of RMB surplus into gold, how much gold would China need in the SGE warehouses to satisfy demand?"

A: "... China would need approximately 6,804 metric tonnes of gold in SGE warehouses to satisfy the annual demand from converting 80% of RMB trade surpluses. This is roughly 17% of current global annual gold mine production (≈400,000 tonnes mined yearly) ..."

Q: "What would the price of gold need to be (in dollar terms) in order for China to be able to satisfy the hypothetical 80% of RMB trade surplus to gold demand using just 90% of China's gold mine production?"

A: "... The price of gold would need to reach approximately $72,189 per troy ounce for 90% of China's annual mine production (342 tonnes) to cover the $793.76 billion demand."

 

[pmbug]

They don't mention SHFE/SGE, but that's part of the project:

Authorities are looking into boosting tokenised gold trading in Hong Kong as a step forward to becoming the world’s first such settlement centre and shielding the city against US-dollar dominance amid rising geopolitics, the Post has learned.

Sources said Chief Executive John Lee Ka-chiu was expected to enhance efforts to build up Hong Kong into an international gold trading centre in his policy address on Wednesday, his second-last blueprint for his incumbent term.
...

More:

Hong Kong to explore boosting tokenised gold trading in city

Move can help shield city against US-dollar dominance amid rising geopolitics, sources say.

www.scmp.com

 

[pmbug]

Related:

John Lee, chief executive of China's Hong Kong Special Administrative Region (HKSAR), announced plans to expedite the development of new growth areas to reinforce Hong Kong's status as an international financial center, including the establishment of an international gold trading market.

Delivering his fourth policy address on Wednesday, Lee said that the HKSAR will support the Airport Authority Hong Kong (AAHK) and financial institutions to establish Hong Kong's gold storage facilities, with a target gold storage capacity of over 2,000 tonnes in three years, propelling Hong Kong into a regional gold reserve hub.

Lee emphasized the need to encourage gold traders to set up or expand refineries in Hong Kong, and to explore with the Chinese mainland the feasibility of processing supplied materials in the Chinese mainland to produce refined gold for exporting to Hong Kong for trading and delivery.

He also announced plans to establish a central clearing system for gold in Hong Kong to provide efficient and reliable clearing services for transactions of gold in compliance with international standards, and to invite the participation of the Shanghai Gold Exchange to prepare for mutual market access with the Chinese mainland in the future.
...

More:

HKSAR to build an intl gold trading market: John Lee

global.chinadaily.com.cn

 

[searcher]

^
More:

Policy Address

The Chief Executive's 2025 Policy Address

www.policyaddress.gov.hk

China to Smooth Gold Imports as Prices Soar and Yuan Rallies​

https://archive.is/MrT5c

 

[pmbug]

 

[pmbug]

China's SGE has been massively accumulating gold in 2025 as China expands SGE warehouse operations in support of their plan to develop a global RMB-gold payment rail for international trade.

Now China wants more of its citizens' investment gold in the SGE system. I can only surmise that they want to further boost trading liquidity in the SGE exchange.

 

[nickndfl]

I would support a USA VAT in lieu of income and property taxes.

 

[pmbug]

Back in February, China intiated a pilot program inviting 10 insurance companies to become SGE members and buy gold up to 1% of assets under management (AUM). I had not seen any further news on the subject since then so I asked Grok to do some digging for me. Apparently, from what can be confirmed publicly:

1) Only four insurance companies have been confirmed to participate as members of the pilot program so far:

PICC Property and Casualty Insurance Co., Ltd. (also known as China People's Property Insurance Company)
China Life Insurance Co., Ltd.
Ping An Life Insurance Co., Ltd. of China
China Pacific Life Insurance Co., Ltd.

2) Ping An Life Insurance Co. apparently does not disclose their AUM publicly. Grok couldn't find it.

3) The other three companies have a combined AUM of USD $1.313 Trillion as of Q3 2025 (again, that's a lower bound since Ping An Life's AUM is unknown).

4) Grok could not find any public disclosure on how much gold the insurance companies acquired as part of the pilot program. We can estimate the maximum limit though. 1% of AUM would be USD $13.13 Billion. The average price of gold since the pilot program began in March until now is estimated (by Grok) at $3,500 per ozt. That would provide a rough estimate of 3,751,428 ozt (116.6825 metric tons) of gold.

5) The SGE does not publicly disclose gold vault stock (they apparently learned how to operate from the LBMA). Grok estimated the SGE vault stock (based upon withdrawal data since 2002) at 23,745 tonnes. I have low confidence in that number. The SHFE (futures exchange) currently holds about 87 tonnes of gold.

It would seem that even at this nascent stage of the pilot program with just four known participants that the gold demand could be quite significant. For some perspective, the LBMA claims at the end of September to have held 8,841 tonnes of gold, but it's unknown how much of that is actual free float versus ETFs (like GLD) or possibly central bank holdings.