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Beijing Strengthens Its Position as Gold Prices Rise

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In LFTV Ep 173, Beijing’s strategic moves bolster rising gold prices. Hosted by Shane Mirand with insights from Andrew Maguire, explore the impact of BRICS and their gold-backed currency initiatives on the global gold market.

In Episode 173 of “Live From the Vault,” hosted by Shane Mirand, precious metals expert Andrew Maguire delves into the increasing gold prices, focusing on the influence of Beijing’s strategic initiatives. This episode explores the critical shifts in gold market dynamics, driven mainly by the actions of BRICS (Brazil, Russia, India, China, and South Africa) nations and their gold-backed currency initiatives. Understanding these factors is crucial for anyone interested in the future of gold investments and market behavior.

The Significance of Gold Price Suppression

Western markets have been known to suppress gold prices for over half a century, using mechanisms that often keep gold undervalued relative to its actual demand and potential. This suppression has been a tool to maintain the dominance of fiat currencies, especially the US dollar. However, recent actions by Beijing and other BRICS nations challenge this status quo.

Market Dynamics Shift: CME and LBMA as Price Takers

Traditionally, the CME and LBMA have acted as price makers in the gold market, setting prices through futures contracts and spot markets. However, these entities are increasingly becoming price takers due to the growing influence of physical gold demand, particularly from China. This shift is reshaping how gold prices are determined globally.

Central Bank Actions and Their Implications

Central banks worldwide, particularly in BRICS nations, have ramped up their gold purchases. This trend is especially pronounced ahead of major economic events like the Federal Open Market Committee (FOMC) meetings. These banks’ strategic accumulation of gold is a direct response to economic uncertainties and a move towards stabilizing their currencies with tangible assets.

The Battle Between Physical and Paper Gold Markets

A significant theme discussed in the episode is the ongoing war between physical and paper gold markets. While paper gold markets, represented by ETFs and futures contracts, dominate trading volumes, the physical gold market is gaining traction. Investors and central banks increasingly turn to physical gold as a haven, highlighting the disparity between these two markets.

The Influence of BRICS on Gold Prices

The BRICS nations are at the forefront of influencing gold prices. Their initiatives, including developing a gold-backed currency, aim to reduce dependence on the US dollar and enhance their economic sovereignty. China’s strategy, in particular, involves not only state-level gold accumulation but also encouraging its citizens to invest in gold, thus bolstering domestic demand.

China’s Central Bank and Its Strategic Role

China’s central bank plays a pivotal role in supporting gold prices. China is fortifying its economic position by steadily increasing its gold reserves and promoting gold investment among its citizens. This strategy helps mitigate risks associated with currency fluctuations and enhances the yuan’s stability.

Supply and Demand Dynamics in the Gold Market

The demand for physical gold significantly influences the gold market’s supply dynamics. Supply constraints become evident as more central banks and private investors turn to gold. This rising demand against limited supply supports higher gold prices, reflecting the market’s strength.

Short-Term Market Volatility

Gold prices are subject to short-term volatility driven by various factors, including economic news, geopolitical tensions, and market updates. While these fluctuations can be sharp, the long-term trend remains positive due to sustained demand and strategic accumulation by key players like China and Russia.

Strategic Gold Accumulation by China and Russia

China and Russia have strategically accumulated gold over the past few years. This accumulation is a hedge against economic instability and a move to assert more control over global financial systems. Their substantial gold reserves provide a buffer against currency depreciation and economic sanctions.

Future Outlook for Gold Prices

Looking ahead, gold prices are expected to continue rising. This projection is based on several factors, including ongoing geopolitical tensions, the increasing demand for physical gold, and the strategic initiatives by BRICS nations. As these elements play out, gold will likely remain a critical asset for investors seeking stability and growth.

Conclusion

The video reveals that Beijing’s efforts to support rising gold prices are forcing the Fed-controlled CME and LBMA market makers to become price takers, a significant shift in the gold market dynamics. This is primarily due to China’s strategic accumulation of gold and the implementation of a gold-backed BRICS currency.

Key Points

Gold Price Suppression

Over 50 years of gold price suppression by Western markets is being challenged.

Market Dynamics Shift

CME and LBMA market makers are becoming price takers due to external pressures.

Central Bank Actions

Central banks are heavily involved in the gold market, particularly ahead of the FOMC meetings.

Physical vs. Paper Gold

The war between paper and physical gold markets is ongoing, with physical markets gaining traction.

BRICS Influence

The BRICS nations, especially China, significantly impact gold prices with their gold-backed currency initiatives.

Chinese Central Bank

China’s central bank actively supports gold prices, encouraging citizens to invest in gold.

Supply and Demand

A significant demand for physical gold affects the market’s supply dynamics.

Market Volatility

News events and market updates continue to drive short-term volatility in gold prices.

Strategic Gold Accumulation

China and Russia have been strategically accumulating gold, impacting global gold prices.

Future Outlook

The expectation is for a continued rise in gold prices as physical demand and geopolitical factors play out.

Summary

  1. Introduction and Market Context: Shane Mirand and Andrew Maguire introduce the episode, highlighting the significant changes in the gold market dynamics, mainly due to BRICS initiatives.
  2. Short-term Market Update: Discussion on the short-term actions in the gold market, revealing the ongoing war between paper and physical gold markets.
  3. Gold Price Dynamics: Analysis of recent gold price movements, highlighting the influence of central bank actions and market positioning.
  4. Physical Gold Demand: Examination of the strong demand for physical gold, particularly from central banks and Asian markets.
  5. Impact of BRICS and China’s Strategy: Detailed discussion on how the BRICS nations, especially China, are driving changes in the gold market with their gold-backed currency.
  6. Speculation and Stability: Addressing the concerns about speculation in the Chinese gold market and its long-term stability.
  7. Historical Context and Price Suppression: Historical perspective on gold price suppression and its impact on current market conditions.
  8. Strategic Accumulation by China and Russia: How China and Russia’s strategic accumulation of gold is influencing global prices.
  9. Future Projections: Projections for the future of gold prices, considering the ongoing geopolitical and market dynamics.
  10. Closing Remarks: Final thoughts on the importance of understanding the differences between paper and physical gold markets and the impact on personal investments.

FAQs

What is gold price suppression? It refers to artificially keeping gold prices low, often through mechanisms in the futures and derivatives markets, to maintain the perceived stability of fiat currencies.

How are BRICS nations influencing gold prices? BRICS nations are influencing gold prices by accumulating large gold reserves and initiating a gold-backed currency, which reduces their dependence on the US dollar and enhances their economic sovereignty.

Why is China’s central bank buying gold? China’s central bank is buying gold to diversify its reserves, stabilize the yuan, and encourage domestic investment in gold, which helps fortify its economic position.

What is the difference between physical and paper gold markets? Physical gold markets involve buying and selling gold bullion, coins, and bars. In contrast, paper gold markets involve trading gold derivatives like ETFs and futures contracts that do not include the physical transfer of gold.

How does central bank activity affect gold prices? Central bank activity, such as large-scale purchases or sales of gold, can significantly impact gold prices by altering supply and demand dynamics and signaling economic confidence or uncertainty.

What are the future projections for gold prices? Future forecasts for gold prices are generally optimistic, driven by sustained physical demand, geopolitical tensions, and strategic initiatives by BRICS nations to bolster their economic sovereignty through gold.

Kinesis Money Review – Beijing fortifies a rising gold price – LFTV Ep 173

Introduction

In this episode of “Live From the Vault,” hosted by Shane Mirand and featuring Andrew Maguire, the discussion revolves around the increasing gold prices and Beijing’s strategic maneuvers in the global gold market. The episode explores the impact of the BRICS nations, particularly China, on the gold market and the broader implications for international economic dynamics.

Market Dynamics and Gold Price Suppression

For over 50 years, Western markets have suppressed gold prices. However, recent developments are challenging this status quo. The Federal Reserve-controlled CME and LBMA market makers, who have traditionally been price setters, are now forced to become price takers. This shift is primarily driven by China’s strategic accumulation of gold and the implementation of a gold-backed currency by the BRICS nations.

Central Bank Actions and Physical vs. Paper Gold

Central banks, especially in Asia, play a significant role in the gold market. There is a clear distinction between the physical and paper gold markets, with the former gaining more influence. The paper market, dominated by the COMEX, is increasingly seen as unsustainable due to its reliance on leveraged positions not backed by physical gold.

Short-term Market Update

The episode discusses short-term market actions, revealing the ongoing conflict between paper and physical gold markets. This conflict is characterized as a war with significant implications for market dynamics. Recent data shows that central banks are heavily involved in gold transactions, particularly before FOMC meetings.

The Impact of BRICS and China’s Strategy

A significant portion of the discussion focuses on the influence of the BRICS nations, particularly China, on the gold market. The BRICS countries are working towards establishing a gold-backed currency, expected to impact global gold prices profoundly. China, in particular, is actively encouraging its citizens to invest in gold with state-backed incentives and policies aimed at increasing gold holdings.

Speculation and Stability in the Gold Market

Addressing concerns about speculation in the Chinese gold market, Andrew Maguire reassures that China’s current gold buying trend is not speculative and is unlikely to lead to a historic crash. Instead, the rising gold prices are supported by strong physical demand and strategic accumulation by central banks, particularly in the BRICS nations.

Historical Context and Price Suppression Efforts

The episode provides a historical perspective on gold price suppression, highlighting key events and decisions shaping the current market dynamics. These include the Federal Reserve’s attempts to cap gold prices and the significant role played by the LBMA and COMEX in maintaining market stability.

Strategic Accumulation by China and Russia

China and Russia have strategically accumulated gold, significantly impacting global gold prices. This accumulation is part of a broader strategy to reduce dependence on the US dollar and establish a more stable and secure economic foundation. The episode details how these strategic moves are influencing global gold market dynamics.

Future Projections for Gold Prices

Looking ahead, the episode projects continued to increase gold prices. This projection is based on the ongoing physical demand for gold, geopolitical factors, and the strategic actions of the BRICS nations. The expectation is that gold prices will continue to rise, driven by strong physical demand and strategic accumulation by central banks.

Conclusion

The episode concludes by emphasizing the importance of understanding the differences between paper and physical gold markets. It highlights the need for investors to focus on physical gold, backed by tangible assets, rather than paper gold, which is subject to market manipulation and volatility. The strategic actions of the BRICS nations, particularly China, are reshaping the global gold market and driving prices higher.

Key Points

  • Gold price suppression by Western markets is being challenged.
  • CME and LBMA market makers are becoming price takers.
  • Central banks are heavily involved in the gold market.
  • There is a significant distinction between physical and paper gold markets.
  • The BRICS nations, particularly China, are driving changes in the gold market.
  • China’s central bank is supporting gold prices and encouraging citizen investments.
  • Physical solid demand is affecting market supply dynamics.
  • News events and market updates continue to drive short-term volatility.
  • Strategic accumulation by China and Russia is influencing global gold prices.
  • Future projections indicate continued rises in gold prices due to physical demand and geopolitical factors.

This article provides a comprehensive overview of the key discussions and insights from the episode, highlighting the significant developments and strategic actions influencing the global gold market.

Date: May 20, 2024