Asian gold market is advancing at a rapid pace, although the precious metal is mostly traded on the London exchange. When all western investors averted from gold, Asia took the initiative.
Three large financial centers of Asia are starting trading gold futures denominated in local currency. In case they manage to attract investors, new contracts may undermine London’s dominance in gold pricing.
Shanghai Gold Exchange located in the free trade zone went live in September offering the yuan denominated physical gold contracts (with gold kept in Shanghai vaults). The SGE will set the prices for gold and may push them to their true levels which will trigger chaos among the currencies that are not backed by the gold. In this case the world will have to get back to currencies’ true values.
If this happens, Asian currency will be protected and the West will not be longer the center of global gold flows.
