Podcast: Comex Pricing is a Lie
Authored by GoldFix ZH Edit
- Why is China’s Price higher than Comex?
- Along With the USD, Global US Pricing Power is Waning
- Either Price Converges, or Gold Moves East
- COMEX is Dead, Long Live GLD and SLV
- Chinese Policy in American Clothes
At 11:34 p.m. ET the price of gold in prompt contract form on the Shanghai Gold Exchange was approximately equivalent to $2004/oz. with Gold trading $1935 on the COMEX. This was a recent new high in the spread between the two exchanges. People took notice of this as posted by our friend and writing colleague Bai Xiaojun in China.That prompted us to record the following for subscribers asking questions on topic. Full unlocked podcast here
**Podcast Transcript: Warning, Profanity. Sound is a little tinny….
Why is China’s Price higher than Comex?
I am happy to say that finally there's an increasing awareness that the disparity between say China's pricing of gold or Japan or India and US pricing of gold.
We're talking about silver here obviously as well, but gold is easier to see.
The disparity between those two markets is consistent, persistent and widening.
What does that mean?
Along With the USD, Global US Pricing Power is Waning
That means the pricing mechanism is broken in the U.S.
It means that the price in China, which is higher, can be viewed as the right price if you want to sell, and the price in the U.S., which is lower, can be viewed as the right price if you want to buy1
De-Globalization, Mercantilism, and Fragmented Collateral
The reason it persists and is increasing is because this is a deglobalized market, a function of mercantilism, which means, I'm sorry I say it all the time, which means that there is a lack of flows across the border between East and West now.
And as a result of that
You have a fragmentation in pricing power, which is what the US, the COMEX, is now starting to see in a little bit more zealous fashion.
The pricing power, as the pricing power weakens here, the pricing power increases elsewhere.
Multipolar would be the word.
But let's assume that it's just going from here to China.
It's going from here to China and the price contains a disparity and there's a bigger spread and it has for a longer period of time.
It either does not rectify because of a complete bifurcation of economics and U.S.
Gold is in the U.S.
and Chinese gold is in China
or it rectifies and it rectifies by arbitrage.
An arbitrage which used to be freely permitted across the globe is now becoming more restricted.
Full Podcast and Transcript here ...
