My guess is it will take Russia and China and the other BRICS nations
most of 2018 to get all the nuances worked out and the gold trade
settlement contracts will not actually come to the table until 2019 or
possibly even 2020. We say this in light of what happened with the
Shanghai Gold Exchange (SGE) bringing their
gold settlement mechanism online back in April 2016.
The SGE was supposed to bring this online in October 2015, but was unable
to make it happen as they wished to avoid any major mishaps when
launching. Anyone that has dealt with the launch of a new computer
system or an “upgrade” to a computer system understands there are
usually massive problems to begin with, as going from a virtual world to
real world can sometimes be quite different than originally anticipated.
We have been reluctantly reporting on the “gold backed oil contract”
supposedly coming out of China sometime in the future. We can say with
100% certainty there will be a yuan backed oil contract launched in the
very near future, as that has been officially announced and an actual
contract exists. The gold backed portion is still a little sketchy at
this point as there has been no official announcement, no Chinese
official discussing, nor does any contract exist that is tied to the yuan
backed oil contract.
What we just learned “First Deputy Chairman of Russia’s Central Bank Sergey Shvetsov said Friday“, Russia and China are discussing a “single (system of) gold trade both within BRICS and at the level of bilateral contacts.”
Is this the reason for the two recent attempts at beating gold down
the line? Neither attempt, in my opinion, was very successful except in
the very, very short term as both attempts were greeted with equal
amount of contracts on the acquiring side of the trade. The gold bugs
were waiting to pull the trigger on these smashes and as soon as the
gold chart dropped, it reversed, and most of the “losses” were regained
within 48 hours or less.
With this announcement hitting the wire on Friday, November 24, it
would make sense these recent smashes were the type of attempt to push
even more people out of the gold market (and into bitcoin) to keep
them away from real, tangible money. This also happens to coincide with
the official gold holdings monthly announcement showing Russia, once
again, increased her share of physical gold at the Russian Central Bank.
Russia has made it very clear that the Federal Reserve Note is a threat to Russian sovereignty and the Russian economy. Russia has also made it crystal clear that she will be making moves away from the Federal Reserve Note, US dollar.
The Russian news service, TASS, is reporting
“The traditional (trade) system based in London and
partially in Swiss cities is becoming less relevant as new trade hubs
are emerging, first of all in India, China and South Africa. We are
discussing the possibility to establish a single (system of) gold trade
both within BRICS and at the level of bilateral contacts,” he said,
adding that this system may serve as a basis for further creation of new
benchmarks.
According to Shvetsov, the Bank of Russia has already signed a
memorandum on development of bilateral gold trade with Chinese
colleagues. The regulator plans to take first steps towards formation of
a single trade system with the People’s Republic of China in 2018, he
added.
“We assume that trade and clearing links should be established. The
point is that gold buyers should decide on the place of purchase,” the
official said, adding that trade links would enable market participants
to make deals on international exchanges via the central counter-party.
Source
It sounds like our 2018 forecast
seeing the beginning stages of the run up to $1,700+ are now getting
secondary support from an actual gold market using physical gold. Russia
and China have been making subtle moves with gold over the past several
years, and this announcement seems to be the next step in the evolving
gold as money story. We will see gold come back to the table as trade
settlement. What form it takes has been one of the remaining questions
and now we are seeing that conversation begin to unfold. Got physical?
 
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Rory Hall, Editor-in-Chief of The Daily Coin, has written over 700 articles and produced more than 200 videos about the precious metals market, economic and monetary policies as well as geopolitical events since 1987. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver and Silver Doctors, SGTReport, just to name a few. Rory has contributed daily to SGTReport since 2012. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Visit The Daily Coin website and The Daily Coin YouTube channels to enjoy original and some of the best economic, precious metals, geopolitical and preparedness news from around the world.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
