Gold Prices Could Be Set in the East, Shanghai Gold Exchange Witnessing Increasing Volume
When trying to predict gold prices, it’s important to pay attention to the east. That’s where a lot of gold could be consumed, not to mention that there could be major buying happening there in the next few years.
What do we mean by “East?” We mean countries located in Asia-Pacific region.
Talk to any gold expert and they will tell you this as well: that gold is moving from the west to the east. It wouldn’t be shocking to see gold prices being set in the eastern part of the world as well, rather than just in the west.
As the western world disregards gold and calls the precious metal a “pet rock,” the east is building gold trading hubs. They are getting a lot of volume as well.
For instance, consider the Shanghai Gold Exchange. On October 30, this gold trading hub based in China celebrated its 15-year anniversary. Over the years, the exchange has become a leader in terms of gold volume traded on the exchange. It also has increasing participation.
How much gold is traded on this exchange? In 2016, it was 569 tonnes. In 2017, this figure is expected to almost double to 1,000 tonnes. (Source: “Shanghai Gold Exchange marks 15th anniversary,” Xinhua News Agency, October 30, 2017.)
Moscow Exchange Making Strides in Gold Trading
However, don’t for a second think the Shanghai Gold Exchange is the only gold trading hub in the east.
There’s also the Moscow Exchange in Russia. Its precious metal market is relatively new, but it could become more transparent and feature a lot more volume in the near future.
Why? This is mainly because the central bank of Russia, which has been buying the precious metal nonstop on the spot market, could be buying gold through the Moscow Exchange. Buying on an exchange would make the buying process simple for the central bank. (Source: “Russian central bank may start buying gold on Moscow Exchange –sources,” Reuters, October 10, 2017.)
Gold Prices Outlook: Could a Crash Wake Gold Investors Up?
Dear reader, if you pay attention to the noise out there, it will have you convinced that the yellow precious metal isn’t worth it and that gold prices are going to remain suppressed for a very long time.
You see, you must understand that the last sell-off in gold prices back in 2013 didn’t really do much to the buyers who have been buying all along. It would be worrisome if gold exchanges in countries like China and Russia closed and didn’t have much volume.
We are seeing the exact opposite. There’s really a new energy in those markets since the sell-off.
We know that sometimes, markets tend to be irrational and forget fundamentals. Eventually, investors come to their senses and rush to buy things they have been ignoring all along.
What could be the catalyst that sends gold prices soaring?
Investors usually run towards precious metals in times of uncertainty. Currently, investor sentiment is complacent.
If there’s a stock market crash or even a bond market crash, we could see investors rushing towards gold. In the midst of it, it wouldn’t be shocking if we find that there’s a massive shortage of gold already. At that point, gold could be worth much more than it is now.