With eye on Trump, China acts to speed up gold imports

With Republican presidential contender Donald Trumps decisive win in the Indiana primary solidifying his grip on his partys nomination, China addressed the implications of the billionaires victory through its state-controlled media. Meanwhile, it continues to take steps to corner the market on precious metals in its bid to elevate its yuan currency as a serious rival to the U.S. dollar.

Though a White House win by Democratic rival Hillary Clinton likely would maintain the status quo of Sino-U.S. relations, Chinas Global Times noted that Trump represents a more uncertain outcome. If Trump really captures the White House, what will it mean? This scenario is becoming increasingly serious, it wrote.

A Trump-led U.S. might be inclined to isolationism and attach more importance to America First, and American economy, it added. After enjoying massive trade surplus from the U.S. for years, China and Japan will be demanded by Washington to widen market access.

China with strength awaits president: The newspapers solution for China? Improving strength is the most reliable way to respond to the U.S. uncertainties. We believe that no matter whether Trump or Clinton prevails, they will see a China with strength from different perspectives.

And that show of strength is on display right now, with China planning military drills in the South China Sea as it exercises control over the disputed Spratly archipelago. The maneuvers will involve advanced warships and submarines, including a guided-missile destroyer. Allied closely with the Philippines and other nations with a stake in the area, the U.S. Navy has put on numerous displays of force in the disputed waters in the past year in attempting to limit Chinas moves.

Gold-import rules streamlined: China also is keeping its eyes on the precious-metals sphere, where it continues to mine, amass, import, and trade massive quantities of bullion. And importing it just got a whole lot easier, with Bloomberg reporting that Chinas central bank has relaxed rules to speed up acquisition of the metal.

The central bank and customs will allow companies that have frequent imports and exports of gold and gold products to apply for a single permit that can be used in as many as 12 shipments, Bloomberg noted. The trial to simplify the rules takes effect June 1 and applies to Beijing, Shanghai, Guangzhou, Qingdao, Nanjing and Shenzhen.

The move will reduce paperwork and speed up gold imports because previously importers had to apply for an overall import quota from the central bank and then report and register every single shipment, said Jiang Shu of Shandong Gold Financial Holdings Capital Management Co.

Shanghai bourse stockpiling silver: Moreover, China is devoting efforts to increasing its control over the global silver trade. Steve St. Angelo of the SRSrocco Report says a key Shanghai exchange is on course to amass more silver than JPMorgan has on the Comex.

JPMorgans total silver inventories have declined from 69.4 Moz (million ounces) to 67.2 Moz, while the Shanghai Futures Exchange silver stocks have increased from 54.7 Moz to 60.6 Moz, St. Angelo noted. If the Shanghai Futures Exchange continues to add silver at this rate, it will surpass JPMorgan in a two to three weeks. The Chinese are adding a lot of silver to their Shanghai Futures Exchange warehouses. The build from 7.5 Moz in August 2015 to over 60 Moz of silver in the beginning of May puts JP Morgans four-year inventory growth to shame.

Time is running out fast for London hub: In other words, China is opening up the floodgates even further to accumulate huge quantities of precious metals while also tightening its grip on market pricing mechanisms (witness the recent launch of its yuan-denominated price fix). The goal: to make its currency as good as gold.

Not many in the West are paying attention to these developments, but some are, especially in London, the current world epicenter of the gold trade. One gold dealer there told the Platts news service that someone needs to step in and help rejuvenate Londons importance as a global gold hub. I think it should be the best [London as a global hub for gold trade] and still could be, but time is running out fast, he said.

Some would argue that time also is running out on the U.S. dollars dominance as a global reserve currency. It remains to be seen who will best maintain that primacy, Trump or Clinton (or someone else). But regardless of who wins the presidency, rest assured that China is getting prepared.

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