zero-hedge-dot-com-red.png


http://www.zerohedge.com/news/2014-08-20/china-becoming-global-gold-hub-and-gold-price-discovery-centre

China Becoming Global Gold Hub And Gold Price Discovery Centre

by GoldCore on 08/20/2014 05:09 -0400


Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month
China is moving closer to positioning itself as the physical gold trading hub of the world and the world’s gold price discovery centre. It is a natural progression for the largest economy in the world and for the world’s largest gold buyer, importer and indeed producer.

The Shanghai Gold Exchange (SGE) is launching its yuan denominated international bullion trading exchange next month. This is another important step in internationalising the yuan or renminbi and positioning it as an alternative global reserve currency.

png%3Bbase64e20ed3df46a272fb.png
(AK NOTE: Interesting chart of six monetary "phoenix"-ings of the financial 
system since 1450... now the attempt to make China the Global Reserve currency...)




Bloomberg reports this morning that

The Shanghai Gold Exchange plans to start bullion trading in the city’s free-trade zone on Sept. 26, according to three people with knowledge of the matter. 
The people asked not to be identified because they aren’t authorized to speak to the media. Gu Wenshuo, a spokesman for the exchange, confirmed that the trading system is being tested, without giving further details. 
Shanghai wants to become a regional bullion-trading hub, giving foreigners access to the world’s largest physical-gold market, Xu Luode, the exchange’s chairman, told a conference in Singapore in June. 
The gold contract will be priced and settled in yuan and the infrastructure is in place for trading to start in the third quarter, Xu said in June. The zone will have a vault capable of holding 1,500 metric tons of gold, which can either be imported into China or be in transit to other markets, Xu said. 
China is seeking to open up its bullion markets just as domestic demand weakens. 
Consumption contracted 19 percent in the first six months of the year, according to the China Gold Association. Bullion of 99.99 percent purity traded on the Shanghai Gold Exchange climbed 8.7 percent this year, damping demand which reached a record in 2013.


Reuters reports this morning that

China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal. 
The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre. 
China and other Asian gold trading centres such as Singapore are calling for more localised pricing of the precious metal as they seek alternatives to the so-called London fix, the global benchmark for spot gold prices, which is being investigated by regulators on suspicion that it may have been manipulated. 
Standard Chartered (STAN.L), Shanghai Pudong Development Bank (600000.SS) and China Merchants Bank (600036.SS) were given regulatory approval recently to import gold, five sources with direct knowledge of the matter told Reuters. 
China approached foreign banks, gold producers and refiners to participate in SGE's international bourse, sources told Reuters earlier in the year, to boost its position as a price-discovery centre for gold. It plans to launch three physically-backed gold contracts.
The chairman of the exchange said in June that China should have its own pricing benchmark as it is the biggest consumer and producer of gold.


Conclusion

Chinese gold demand has fallen from record levels in recent months. this was to be expected given the huge leap in demand seen in recent years. Nothing moves in a straight line and a fall was inevitable and reflects the natural ebb and flow of demand, one would expect.

However, an important fact, not realised by most market participants, is that the people of China were banned from owning gold bullion by Chairman Mao in 1950. This means that the per capita consumption of over 1.3 billion people is rising from a miniscule base. This suggests that demand will consolidate at these levels and could again return to record levels - particularly if there are losses in the Chinese property market or stock markets.


This prohibition continued until 2003 when the Chinese gold market was first liberalised and China made its first steps to becoming a global gold hub to rival New York or London.

Since the market in China was liberalised, gold in yuan terms has risen by more than 250% while the stock market has performed poorly.

Even after the significant increase in demand seen in recent years - Chinese per capita gold ownership remains well below that of the levels seen in India and other Asian countries and indeed below levels seen in more affluent Hong Kong.

year-of-the-dragon-gold-coin.png

Culturally, India is known to have the greatest affinity for gold in the world. China had a similar cultural affinity prior to the "cultural revolution" and in time its levels of gold ownership will likely rival those seen in India, Vietnam and other Asian countries.

Within the lifetime of many Chinese people living today is the experience of hyperinflation as many middle aged and elderly Chinese people experienced hyperinflation in 1949.

Therefore, as in Germany, there is a greater awareness of what inevitably happens when a central bank debases the paper currency.

Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” or major change in the fundamental supply and demand situation in the gold and silver bullion markets.

This is particularly due to investment, store of wealth and central bank demand from China and the rest of an increasingly affluent Asia.

png%3Bbase647f1efbfa6246d667.png
Gold Bust (2.8 Kilogramme) of Deng Xiaoping
 (Reuters/Bobby Yip)

It is worth noting that the People’s Bank of China’s official gold reserves are very small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $3 trillion.

The People’s Bank of China is continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices. They also do not wish to create a flight from the dollar – thereby devaluing their sizeable dollar reserves.

Expect an announcement from the PBOC, sometime later this year or in 2015, that they have trebled or even quadrupled their reserves to over 3,000 or 4,000 tonnes.

Source: China Becoming Global Gold Hub And Gold Price Discovery Centre

Receive our award winning research here

3mJLhq8GrlY?utm_source=feedburner&utm_medium=email

ZERO HEDGE: China Bond Default Risk Reignites, Despite "Never Anticipating Any Risks"

Posted: 20 Aug 2014 07:52 AM PDT


zero-hedge-dot-com-red.png

http://www.zerohedge.com/news/2014-08-19/china-bond-default-risk-reignites-despite-never-anticipating-any-risks

China Bond Default Risk Reignites, Despite "Never Anticipating Any Risks"
Submitted by Tyler Durden on 08/19/2014 22:07 -0400


When, six months ago, we first brought the market's attention to Chaori Solar - China's first corporate bond default in history - there were 2 narrative sin play: 1) it's all good, government knows the contagion risk and will bail them out (that happened), or 2) if government bails them out, it will merely delay the inevitable and stoke further risk exposure (that happened too). However, as Bloomberg reports, the consequences are coming as bondholders met today to discuss the value of any assets left (Chaori’s liabilities were more than 700 million yuan greater than its assets). With China's TSF collapsing last month, perhaps demand is finally waining for these high-risk assets, but expectations of implied government support remain, as one Chaori 'loser' laments, "never anticipated any risks with the securities."



Halted since April...

20140818_china1_0.jpg




As Bloomberg reports,

Holders of China’s first corporate bond to default onshore met today in Shanghai, as investors look for clues on how the government will balance market liberalization with steps to maintain stability.

There was difficulty assessing the overseas assets of Shanghai Chaori Solar Energy Science & Technology Co...

More than 10 police cars were on the street in front of the company headquarters today around 2:30 p.m. as the gathering took place.

While Premier Li Keqiang said defaults may be unavoidable in some cases after Chaori failed to make a full coupon payment on March 7, the country has averted similar cases since. Widespread bond nonpayments would cause financial market turbulence, which can’t be allowed when the economy faces “relatively heavy” downward pressure, according to a front-page commentary in a central bank publication today.

Chaori only paid 4 million yuan ($650,755) of an 89.8 million yuan coupon due in March on its 2017 bonds, becoming the first company to default on a yuan note onshore. Shanghai marked a milestone in corporate bankruptcy in June when a court accepted a restructuring application for the manufacturer.

As of March, Chaori’s liabilities were more than 700 million yuan greater than its assets, according to the statement.
No risk...

Ding Guixiang, who said she invested more than one million yuan in the Chaori bonds, said outside the meeting today that she had never anticipated any risks with the securities when she bought them.
Government to the rescue...except for Chaori...

“To prevent large-scale bond defaults, regulators will strengthen monitoring and supervision to solve crises in a timely manner,” according to the commentary today in the Financial News, a publication of the People’s Bank of China. The commentary was by Xu Shaofeng, who wasn’t identified.
*  *  *

As JPMorgan warned in a previous note,

"avoiding defaults is not the right answer, as it will only delay or even amplify the problem in the future."
A default that encourages lenders to price in risk would be a positive development.

*  *  *

We noted before that a more confident government means more defaults...

With amazing speed in consolidating power in 2013, a more confident President Xi Jinping and team are expected to push for a wide range of reforms. 2014 will be the year for China seriously cleans up mounting local government and corporate debts which have been rapidly accumulated since late 2008. We believe the chance of some bond and trust loan defaults will rise significantly in 2014, especially as the more confident government sees the need for some defaults to develop a more disciplined financial market.
*  *  *
Clearly then - the government is not confident.
E-mail me when people leave their comments –

You need to be a member of Ashtar Command - Spiritual Community to add comments!

Join Ashtar Command - Spiritual Community

Blog Topics by Tags

  • - (956)

Monthly Archives

Latest Activity

Edward posted a status
Weekend~~!!!
Have a nice weekend...
Always..thank you for the good informations and datas..
Take care..
See you later...^^
- Edward Paul Lee
1 hour ago
Drekx Omega left a comment on Comment Wall
"Totally agree with your sentiments anent Vivek Ramaswamy, fellas....He'll be a good insert into the Trump admin, at some stage..

Now, I'll place this useful X22 interview, held a few days ago, which does give a good summary by a Bob Kudla, on some…"
3 hours ago
Justin89636 replied to Justin89636's discussion Anything UFO Or ET Related
"Article from a year ago. Vivek Ramaswamy who will be working with Trump during his next term is on board for UFO and ET disclosure. http://www.newsnationnow.com/space/ufo/ramaswamy-supports-full-ufo-..."
5 hours ago
Justin89636 left a comment on Comment Wall
"Good article about Vivek and ET disclosure. I'm gonna put that in my UFO and ET page."
5 hours ago
Justin89636 left a comment on Comment Wall
"I've been saying that if it does not happen during the end of Trumps term it will be set up so that the next administration which will be somebody who is a patriot like Trump will get everything going in the beginning of their term. I say by…"
5 hours ago
RandyFirstContact left a comment on Comment Wall
"Yes Justin, I do think the next four years will be the best chance we have had at formal disclosure, especially with patriots like Vivek Ramaswamy on Trump's team pushing for this issue.…"
6 hours ago
Justin89636 left a comment on Comment Wall
"I get the feeling we will get disclosure in the next few years probably near the end of Trumps term since we still got to clean up and get rid of the Deep State Cabal and the mess they have created, but we are almost there."
6 hours ago
Drekx Omega left a comment on Comment Wall
"Darth, We live in a technological era in which it is easier to fake UAPs, using drones, or CGI and laser hologram projections, etc..I would say that most UAP sightings are fakes.
HOWEVER, in previous eras, say for example, the 1950s, UAPs/UFOs were…"
6 hours ago
More…