Starting in March, China will become a member of the London Gold Pricing team of bankers that are allowed to set the worldwide price of gold bullion.
Up to now, those bankers have been working closely with U.S Federal Reserve to keep physical gold prices artificially suppressed. What has also been happening, according to numerous website reports, is that the G-7 countries, yes, Britain and the USA, for example, have been eager to sell their physical gold to the likes of China and India. It is rumored that western (another word for G-7 ) countries have emptied their vaults by selling their gold to the east, to countries like China, India and yes, even Russia.
Now that China is going to have a big say in setting the price of physical gold, and since they own the most, likely prices will begin to rise dramatically and work towards a higher price that more suitably achieves supply and demand balance. Since gold production is decreasing, the new price levels for gold ought to be stratospheric. London Gold Pricing Team will likely have to be more market-driven since it faces new competitive pressures.
Recently the Shanghai Exchange opened to the trading of commodities, including gold. In other words, buyers and sellers have a functional alternative market-driven exchange through which to trade their gold at free-market, (demand and supply), prices. If the London Gold Price Fixing team continues to disappoint gold traders by manipulating gold prices away from market forces, then sellers will LIKELY simply deal through the Shanghai exchange.
One could almost hear the old cronies on the current London Gold Price Fixing team complaining, “Ain’t competition a bloody bitch.”