The Chinese national who took on JP Morgan in gold and silver and won. Welcome to the Morning Markets and Metals with Vince Lancey, where each day he brings you the precious metals and financial news to get you ready for your day. And now here’s Vince. Good morning everyone. I’m Vince Lancey. Today we’re going to reveal the Chinese national who took on JP Morgan in gold and silver and won. This is a breaking story in the west. If you’re watching this, you’re one of the first people in the G7 that’s getting filled in. We’re going to stick to the facts as reported.

We’re going to take the Chinese story. We’re going to translate it into English and we’re going to give you just a simple framework of who the players are, keeping commentary to a minimum. Okay, let’s get to it. By the way, this is a very auspicious day. This is decades in the making. It means a lot to me. Okay, starting with the markets. Gold is up 10 and a half bucks. The dollar is down 13 at $104.84. Ten year yields are $428 flat. S&P 500 is $56.26. Down four handles. The VIX is $12.98. Up 14 gold is, as I said, 10 and a half, 11 bucks.

$23.81. Silver is $30.97. Up 15. Copper is $4.57. Down 40 basis points. Oil is down 30 cents at 82.30. Natural gas is $2.26. Offered unchanged. Bitcoin is up over a percentage point at 58.700. That’s almost a thousand points. Ethereum 31.46 up 43 points. Platinum Palladium are offered unchanged. So basically 984 and 988 respectively. There’s a little dance going on there at who’s in first, who’s on first. Grains are all up in an escalating fashion. Soy is up 1131. I’m sorry. Soy is trading 1131 up 10 cents. That’s almost a percentage point. Corn is up 393.

That’s up five cents. That’s almost a percent and a half. And wheat is 575 up 11 cents. That’s two full cents. Wheat I think was recommended by at least one bank over the last couple days. All right. Shall we dance? As I said earlier to restate, we’re going to basically break a story that’s in Asia this morning, their time, and we’re going to go through it and tell you in no uncertain terms what they’re saying and what it implies without giving too many insights. So we’re going to translate the Chinese, and we’re going to translate the translation.

All right, here we go. There are names that I’m going to butcher here, so I may start by apologizing to any of my Chinese brothers and sisters that are listening. Beyond Xiaoming, the Chinese hump brother takes down JP Morgan and pals. Front page. No joke, the petrodollar is already dead. We stand by that. The bricks were used a gold standard. We stand by that. There’s the founder’s version of said story. Peter Schiff had a nice little video out yesterday. Report on Uranium came out, and we shared that with the premium subscribers as well as a couple other things.

There’s a little personal note, and we had a very nice report. It’s also reported on Zero Edge about AI, and it was, I think, interesting in the sense that it was the first time a bank pushed back negative on AI. Just to share the gist of it with you, because I think it’s really interesting. The comment was here, hold on, pop that open. The comment was that technological innovations like the internet come on at low cost. They’re very cheap. They don’t cost a lot of money, and they didn’t at the corporate level.

AI is coming on at high cost. People are buying chips. It feels like that from an economic point of view, the amount of money being spent is not worth at least the short-term return. If you’re spending a trillion dollars on chips, where is the trillion dollars in profits that at least that you can get from it? The answer is it’s non-existent. The other answer is the profits will come from people getting fired. The innovation will come later on as did the dot-com thing, but right now we’re close to the end, I think, of the pets.com scenario.

Those are the stories on the front page. There they are. Moving on. There’s the Chinese story. It’s on S-I-N-A. That’s their website. If you can get access to it, I would suggest DuckDuckGo. All right, here’s the first paragraph or two of the story. I’m going to leave that up there while I read our translation and explanation. Okay, first of all, if you’re reading the Chinese, even translated, it’s going to be a little bit awkward, so I’m going to give you some context. The players in this article, in this story, are someone named Kalyanchay.

That’s, I think, a screen name for his actual name, which is Chen Khandi. The SGE and SFE, a Shanghai Futures Exchange, Shanghai Gold Exchange, they are the exchanges publishing the data. The Zhongkai Futures Company, that’s the entity discussed in the title. The Zhongkai Uyilian Fund is controlled by the entity. That’s their product. That’s trading the gold. Beyond Xiaoming is the majority holder and personal operator of the fund. So essentially, this is a product owned by Zhongkai Futures that he dominates and runs. He owns over 62% of the company. And JP Morgan is the reported counterparty to this trade.

So we’re going to read through this in English. And you can use the transcript, as well as the notes that I have will be attached to the bottom in premium. Okay. Again, this will still be a little bit awkward because we’re trying to deal with idioms here across languages. According to the data from the Shanghai Futures Exchange, Zhongkai Futures led the market 57,200 lots of gold positions, roughly equating to 57 tons of gold as of April 26. On April 11th, they also held 57,200 lots of silver from the Shanghai Futures Exchange, with futures long orders reaching 54,000 lots, ranking third in the market.

And inside, I revealed to the reporter that Zhongkai Futures likely made more than 5 billion yuan in the last gold and silver surge, potentially exceeding 10 billion won. Additionally, Tianqian Fund network data shows that as of April 3rd, the net value of Zhongkai Futures’ number two asset, that fund, the Zhongkai Yulian Fund, I know I’m saying this wrong, was 2.63 yuan, up 426.4% since its establishment, and 103%, 100.3% since the beginning of the year. I believe that’s what we’re looking at in this picture here. After November 22nd, so here’s how it starts.

After November 22nd, Zhongkai in after November of 2022, let me be clear, Zhongkai Futures built long positions in both gold and silver with reportedly JP Morgan Futures as the counterparty of the short positions, said Wang Li, a certified intermediate gold analyst at the Shanghai Gold Exchange. Quick aside here. If they’re matching up who the counterparty is with the buyer, then that must be part of how their exchange operates. Or this is a rumor. I want you to assume it’s not a rumor, because there aren’t many market makers that have access to China from the US, and JP Morgan is one having taken delivery of COMEX Gold and sending it over to China in October of 2023.

The other thing I want to bring to mind is, yes, if you’re a person who’s happy that free markets are prevailing in the sense that the lot that JP Morgan has had on the market is actually breaking, well, let me share this. Whenever a bank gets traded with by a big player and that bank has access where his competition doesn’t, that bank rolls his position through to the other players. So if China was buying from JP Morgan, JP Morgan was buying from the rest of the banks. So the pain gets spread around.

Everyone was net short, but it wasn’t just JP Morgan. So if you have someone that you hate more than JP Morgan, by all means, assume that they lost money. Okay, back to the story. In early 2023, as the US economy strengthened, gold prices dropped significantly, leading to a retracement in Zhongkai futures positions and a challenge for their number one product called another Lotus. This is them going through the tape a little bit, right? Zhongkai futures returned to the bull market by early October last year. Early October last year is when a bank, an American bullion bank, took delivery of physical gold and sent it over to China.

So I want you to understand that this isn’t just futures. This is a futures trader who then takes delivery of spot. Okay. These aren’t futures, traditional speculators. These are future speculators who take delivery and they want the gold. Okay, moving on. This entity called ZY for now, the fund was rapidly building long positions in gold and silver contracts starting October of last year, until they began taking profits in late March of this year. So in October of last year, they took delivery, added more futures in December 3rd. That’s when they intervened to keep a lid on things.

And then they just kept buying and started taking profits in March of this year, which by the way, is also when China started easing off on their own buying. Okay. In recent months, so we’re talking about after April, they’ve started building long positions in various gold contracts. Again, data from the Shanghai futures exchange shows that as of July 9th, Zhonghai ranked prominently in several far month gold contracts, holding a total of 31,000 long positions across all gold contracts, equivalent to a margin of approximately 20.7 billion yuan, or about 31 tons of gold.

They also held significant long positions in silver futures contracts. Another aside, those macro discretionary guys that I talk about as being part of the game, part of driving this market higher, those are the guys that got wind of what this guy was doing first. Wang Li noted that gold still has room to rise in the second half of the year. So here’s the prediction part. Since April 15th, the price of gold has fallen more than 22 yuan per gram with over 10 billion yuan leaving the market. He believes the factor supporting gold’s upward trend remain, including the potential for Fed rate cuts in the third quarter, which traditionally have a significant impact on gold prices.

Geopolitical risks, trade frictions, and exchange rate issues also provide strong support for gold strength. So who is this beyond Ximing? And what is a serialized diary? What is that? I want to tell you. Zhonghai Futures was established in 1995. It’s controlled by Zhonghai Merchants Investment Group with beyond Zhongming as the legal representative and actual controller owning 65.32% of the shares. Now, this entity, while it’s a corporation, is guided by the state. Brown Zhongming is known for his low profile and has been writing a they’re calling it a diary. I’m trying to think of a better English word for it.

A trade blotter. This is a trader’s blotter. Has been writing a self-reflection diary for 28 years. This is the stuff of confusion. Excellence here, often published on the company’s official website. He’s got a blog. He has been actively involved in the futures market since 2003, and his personal management of the ZY fund has seen significant success, particularly in high leverage gold investments. Beyond’s diary blog, entries reveal his strategic approach, focusing on locking in high leverage Shanghai gold during periods of inflation in European and American economies. His leadership and strategic insights have greatly benefited Zhonghai Futures and its stakeholders.

That’s it. That’s the whole story, translated and then digested so it all makes sense. Here’s the headline in Chinese to English. Here’s a couple excerpts of it and there you go. That’s the whole thing. We’re breaking the story. No one else is talking about it. We’re talking about it and well hopefully you will be too. I’m Vince. I would like to thank Bai Xiaojun, my collaborator on many gold fixed stories, especially about silver and who has helped confirm or correct my opinions on the Chinese approach to precious metals and culture. I’m deeply grateful for our relationship.

I also will note something that came out in my conversations with him over a year ago when I the large players that are coming out of China now. From all my conversations with him, I picked the title for a story and the title of the story was China’s unfinished business in silver. Now he didn’t say that to me. That was just me looking at the culture and saying you know what these guys have some unfinished business with silver and gold and since then I think this guy beyond he’s like a Chinese hunt brother unfinished business with silver and gold.

This is an old school guy who’s got connections and he’s not afraid to take on the big boys. Anyway, today’s CPI it’ll probably be over by the time you see it’s 3.4 percent expected. Remember CPI comes in weak. That’s bullish for gold and silver and stocks. If CPI comes in strong, that’s bearish. Anything in between and it’s a crapshoot. I’m Vince. Have a great day. I’ll be drinking something besides coffee very early today. That’s all. Well, thanks for tuning into today’s markets and metals with Vince Lancy. The show is brought to you each day by Myles Franklin Precious Metals who we encourage you to consider for your next gold or silver purchase or sale.

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