China To Use Gold Directly To Replace US Bonds

Hong Kong Gold Futures & Yen Intervention – GFIX Market Rundown (Vince Lansancy)

Key Concepts:

• Sovereign Collateral: Using gold as backing for financial obligations, similar to government bonds.
• Plaza Accord: A 1985 agreement between major economies to depreciate the US dollar.
• Bricks Trade Finance: Financial transactions utilizing the currencies of the BRICS nations (Brazil, Russia, India, China, South Africa).
• Measured Move: A technical analysis concept predicting price movement based on previous chart patterns.
• VIX: The CBOE Volatility Index, a measure of market expectations of near-term volatility.
• WTI: West Texas Intermediate, a benchmark for US crude oil prices.
• CTA: Commodity Trading Advisor – a professional money manager specializing in futures and options.

I. Market Overview – November 8, 2023

The market rundown, as of November 8, 2023, shows the following:

• Treasury Yields (Tenure): Up one basis point.
• Dollar Index: Down 28 basis points, primarily against the Yen and Euro.
• S&P 500: Up 21 points.
• Nasdaq: Up 123 points.
• VIX: Down 7 basis points.
• Gold: Up $66 to $2,075 per ounce.
• Silver: Up $7 to $23.11 per ounce; Shanghai Silver trading at $23.75 (a $0.64 differential).
• Shanghai Gold: 5294 yuan.
• Copper: $3.83, down $0.01 - $0.015.
• WTI Crude Oil: $80.75, down $2.00.
• Natural Gas: Down $0.20 (approximately 3.12%) to $3.27.
• Bitcoin: Unchanged.
• Ethereum: Unchanged.
• Platinum: Up $44.
• Palladium: Up $75.
• Grains: Up.

II. Hong Kong’s Gold Infrastructure Development

Hong Kong has completed its clearing system for gold and launched gold futures testing, with a full system trial planned for 2026. This development includes deepening integration with the Shanghai Gold Exchange and expanding gold storage capacity to 2,000 tons. Officials are presenting this as infrastructure development, but Vince Lansancy argues this is a strategic move to position gold for use as collateral, comparable to sovereign bonds like US Treasuries.

This positioning is particularly significant given gold prices exceeding $2,100 and increasing demand from central banks. Hong Kong is seen as a crucial link connecting bullion markets to the internationalization of the Yuan and trade finance within the BRICS economic bloc. Lansancy and Eric Young have been advocating this perspective for the past two months.

III. US-Japan Currency Intervention & Plaza Accord Echoes

A rare coordinated intervention by the US and Japan in the currency markets, specifically a US dollar/Japanese Yen rate check initiated by Tokyo, has sparked concerns. This intervention strengthened the Yen and weakened the Dollar, drawing parallels to the 1985 Plaza Accord. The event signals that Yen instability has escalated into a systemic risk management issue, exceeding typical market volatility. A detailed analysis of this intervention, including academic perspectives and a more accessible audio explanation, was distributed to subscribers.

IV. Technical Analysis – Gold & Silver (Micro View)

Vince Lansancy provided a brief technical analysis of gold and silver:

• Gold: The market is currently in a sideways range, contemplating a move higher. A break above $2,100 could trigger a “measured move” of $100, potentially reaching $2,200. He suggests a short position below $2,072, going flat above $2,100, and going long above $2,110 with a $10 stop-loss.
• Silver: Silver’s price action is less clear, with a spike high followed by a pullback. He suggests caution, potentially favoring a sale of silver to buy gold, given the current chart patterns.

He referenced the work of a trader named Sumo, whose levels aligned with his own analysis, noting resistance around the $2,095 level and potential support around $2,072.

V. Additional Information & Updates

• Goldfix Founders Issue: Subscribers experienced login issues with the “Founders” section of the Goldfix website, resulting in content being distributed to all subscribers as a workaround.
• Content Release: Several new stories were published on the Goldfix website, including a piece titled “Peak Gold 6666” (referencing a SocGen report) which suggests a fundamental value for gold around $6,666 based on per capita ownership equivalent to $800 historically.
• Upcoming Events: The Federal Reserve decision is scheduled for Wednesday, and today’s consumer confidence data will be released.
• Merchandise & Support: New hats and mugs are available for purchase, and viewers were encouraged to support the new employee.

VI. Notable Quotes

• “Hong Kong is building the plumbing that allows gold to function like sovereign collateral.” – Vince Lansancy
• “Gold is being positioned for collateral use alongside sovereign bonds.” – Vince Lansancy
• “If we break above this [gold resistance level], you should assume we get a measured move from 40 from 5,000 to 5100 that adds $100 to the market. It's that simple.” – Vince Lansancy

VII. Synthesis & Conclusion

The GFIX market rundown highlights a significant shift in the global financial landscape. Hong Kong’s development of gold infrastructure, coupled with the US-Japan currency intervention, suggests a growing recognition of gold’s potential role as a strategic asset and a possible alternative to traditional sovereign debt. The technical analysis provides actionable trading insights, emphasizing the importance of identifying key support and resistance levels. The overall message is that gold is increasingly being viewed as a legitimate form of collateral, potentially reshaping the future of global finance and trade.