Former Goldman Sachs trader Andrew Maguire says the new Pan Asia Gold Exchange will create huge new demand that will drive gold prices sky high and there is concrete evidence that China plans to bring the remninbi to the world stage.
"The Pan Asia Gold Exchange is going to send shockwaves through the mechanisms for the price discovery for both gold and silver," Maguire tells King World News. "It's backed by China's state administration for foreign exchange and also the Chinese security regulatory commission."
|(Getty Images photo)
Maguire expects that the first contract — a 10-ounce gold mini-contract for the domestic Chinese retail market — will go live this month.
"It's going to have a major impact on the demand side of precious metals equation … there are 320 million customers of Ag bank of China, who going to be plugged into this exchange platform.”
“If just 1 percent of their customers bought a single 10-oz. contract, that would require new physical demand of 1,000 tons.”
However, Maguire, who has long suspected manipulation in the gold and silver markets, says the biggest bombshell is the offer of RMB gold contracts for international investors.
“I know it's going to attract a lot of the world's precious metal business, providing much more of the Chinese and the international customers an alternative platform on which they can buy and sell buy and sell physical gold and silver," he says.
Maguire believes the impact on silver will be much more pronounced. “We know silver is a much small market and it's already in tight supply,” he notes.
“This is the tinder box."
TheStreet.com reports that the gold price has traded as high as $1557.20 and as low as $1542.30, according to Kitco's gold index. Silver prices were up 26 cents to $36.81 an ounce.
© 2017 Newsmax Finance. All rights reserved.