Small Asian Nation Hopes to Become New Global Gold Hub

We've reported often about the strong demand for gold coming from Asia and the Middle East. Along with that, we're seeing more and more gold market infrastructure built out that challenges the dominance of New York and London.

The latest example is the Singapore-based Abaxx Exchange. This firm just launched a physical 1-kilo gold contract that's deliverable in Singapore, and it will be the first and only physical gold futures contract in Asia.

Abaxx Exchange reportedly wants to offer 24/7 trading, pending regulatory approval, and the startup company has raised over $100 million from investors, including BlackRock.

Abaxx Exchange CEO Josh Crumb called the gold market "dysfunctional," with London serving as the center for physical trading and New York as the futures hub.

He argues that infrastructure hasn't kept pace with how gold is traded and believes Asia must develop markets that are not reliant on New York and London, citing “geopolitical” risks in the U.S. and the UK.

Crumb is also pointing to the need for a more robust physical gold market in Singapore to meet the needs of commercial gold consumers, including jewelry manufacturers.

Gold consumption by emerging market economies is rapidly rising, and the majority is concentrated in Asia. Singapore’s proximity to this growing market sets the city up to become a key player in the global gold market.

Meanwhile, gold is helping unlock mysteries of the universe.

Over the last several years, the new James Webb Space Telescope has produced stunning images that are helping scientists to better understand the universe.

The telescope has now observed galaxies much earlier in time and more massive than expected. This suggests galaxy formation may have occurred faster and more efficiently than current models predict.

JWST has also identified water vapor, clouds, and haze in the atmospheres of several planets outside of our solar system, and CO2 in the atmosphere of exoplanet WASP-39b. This could pave the way for identifying potential biosignatures in the future.

The power of the James Webb Space Telescope dwarfs that of its predecessor and offers unprecedented resolution and sensitivity. The telescope’s ability to “see” deep into the infrared spectrum allows it to image the distant universe as far back as the first galaxies and even the first stars.

So why on earth are we bringing this up during a precious metals podcast you ask? Well, it’s because gold helps to make all of this amazing imaging possible.

Each of the telescope’s 18 gold-coated, hexagonal mirrors has a diameter of just over 4 feet. Stitched together in a honeycomb pattern, the mirrors have a total diameter of 6.5 meters (21.5 feet). The mirrors are made of beryllium and are coated with a microscopic layer of pure gold.

Why gold?

Because the yellow metal is one of the very best materials at reflecting infrared light. A team of scientists, including my very own cousin I'm proud to say, used beryllium as the base for the telescope's mirrors because the metal exhibits almost no thermal expansion at extremely low temperatures.

In other words, the extreme cold in space won’t cause the panels to warp. On the other hand, gold is comparatively temperature sensitive. That's why a thin layer was put on top of the beryllium base.

Scientists say the James Webb Space Telescope has seven times the light-gathering power of the Hubble Space Telescope.

From time to time, you will hear people inexplicably say, “Gold is just a useless metal.” They claim that gold’s value is simply “a matter of faith.”

This is sheer nonsense. In fact, gold is one of the most useful metals on the planet and would probably have even more practical applications like silver does if the yellow metal was not so rare and expensive.

The truth is, gold did not become money because it wasn’t useful for anything else. Its role as money evolved because it is so valuable and has so many uses.

Gold isn’t just used in space exploration. About 80 tonnes of gold were used in industrial and tech applications in just the first quarter of this year alone.

Lastly, and before we get to this week’s interview, let’s take a look at the weekly market action.

Gold is suffering its worst week here since just after Election Day. The yellow metal is down nearly $150, or 4.3% to come in at $3,196 an ounce. Silver has been holding up relatively better, having been essentially flat for the week through Thursday’s close. A pullback here today has silver down for the week now by 1.6% to trade at $32.40 an ounce.

Similar story in the platinum, which is off 1.4% and currently checks in at $1,005. And finally, palladium is seeing a bigger decline, down 3.6% and checks in at $986 as of this Friday morning recording.

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