Russia, China, India Unveil New Gold Trading Network
The comments above & below is an edited and abridged synopsis of an article by Ronan Manly
The annual Russian Bullion Market conference took place on November 24 in Moscow. The most notable speaker was Sergey Shvetsov, First Deputy Chairman of Russia’s central bank.
Shvetsov discussed an important development involving the Russian central bank in the worldwide gold market, and gave insight into the continued importance of physical gold to the long-term economic and strategic interests of the Russian Federation.
He confirmed that the BRICS group of countries (Russia, China, India, South Africa and Brazil) are in discussions to establish their own gold trading system.
Four of these nations (Russia, China, South Africa and Brazil) are among the world’s major gold producers. Russia and China are the world’s largest importers and consumers of physical gold. What these economies have in common is that they are all major players in the global physical gold market.
Shvetsov sees the new gold trading system evolving via bilateral connections between the BRICS countries, and he reaffirmed that the Bank of Russia has signed a Memorandum of Understanding with China on developing a joint trading system for gold. It will begin in 2018.
Shvetsov dismissed the traditional dominance of London and Switzerland in the gold market, saying that their trading operations are becoming less relevant in today’s world. He also alluded to new gold pricing benchmarks arising out of the BRICS gold-trading cooperation.
The major gold-producing nations are tired of an international gold price that is determined in a synthetic trading environment having little to do with the physical gold market.
When the Bank of Russia’s First Deputy Chairman says London and Switzerland have less relevance, and spearheads a new BRICS cross-border gold trading system involving major economies with large reserves of gold and an impressive volume of production and consumption in the precious metal, it is clear that moves are afoot to bring gold price discovery back to the realm of the physical gold markets. The icing on the cake may be gold price benchmarks based on international physical gold trading.