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China are doing more than just amassing physical gold reserves, they are currently implementing an allocated (ie. physical) spot gold exchange (Pan Asian Gold Exchange (PAGE)) as well.
This spot gold price is based on allocated contracts. Watch the spread between PAGE and COMEX when the PAGE spot price goes live. Physical will move toward PAGE if it is priced higher there, while COMEX will fall as traders begin to make the distinction between contracts which can be cash-settled and contracts which are physical-settled, and seize the arbitrage.
First, some background. The Turd has been of the opinion for years that the forward-thinking Chinese are not necessarily planning for tomorrow, they are planning for 20 years from tomorrow, 50 years from tomorrow and 100 years from tomorrow. For example, if you listened to the "Time Monk Radio" interview of Jim Rogers, you heard me ask Jim about the possible, future "gold-backing" of the renminbi by the Chinese. I believe that one of the reasons the Chinese central bank is buying gold is to accumulate gold reserves for this purpose. Of course there are other reasons, too, but at some point in the future, China will sponsor a new regional or global currency that will be at least partially backed by gold. As part of this plan, Beijing is currently developing alternative futures and physical metals markets. The Hong Kong Mercantile Exchange is part of this plan. The soon-to-be-opened Pan Asia Gold Exchange is another.