China is flushing out paper gold ahead of the physical revaluation.

The gold and silver price dip was due to the SFE raising margins to curb paper speculation. More steady physical pricing on the SGE will now lead the way. SFE paper buying was eclipsing SGE physical buying as the main driver of price. The Chinese authorities want physical buying predominant, not paper speculation. More physical buying will now take place (which brings forward the revaluation)… So this is a very good thing. The SFE raised margins on Sat, which is the immediate reason for the price dip. The Chinese authorities are encouraging physical buying, rather than paper speculation.

The Chinese authorities, by raising margins on paper gold and silver trading, have brought forward the physical gold revaluation. An accelerated timeframe for the physical revaluation is far more important than a frothy (yet admittedly enjoyable) paper rally. Paper buying on the SFE was eclipsing physical buying on the SGE as the main driver of price. The Chinese authorities want physical buying to be predominant, not paper speculation. We are now back down to the SGE-led price… and more physical buying will now take place.