Thursday, June 26, 2014

GOLD ABOUT TO COLLAPSE: here's what you need to know

Here are some morning links:

BI - China finds $15 billion tied to fake gold deals. As predicted here, long before the WGC, a big chunk of China's gold imports were not due to physical demand, but was actually destined for financing collateral, and it's all coming apart. Quote:
Spot checks on 25 companies that process bullion, such as jewellers, showed they made a combined profit of more than 900 million yuan by using the bank loans to take advantage of the difference between onshore and offshore interest rates, as well the appreciation of the Chinese currency, according to a report published this week on the National Audit Office's website.

Chinese firms could have locked up as much as 1,000 tonnes of gold in financing deals by the end of 2013, the World Gold Council said in April, indicating a big slice of imports has been used to raise funds due to tight credit conditions, rather than to meet consumer demand.

At current prices, that would be worth about $42 billion.
The trick is to now figure out what that does for future gold demand, especially given a possible poor monsoon in India.

Oh, and by the way: this story hasn't yet been posted on Zerohedge. Why not? Hm? Any idea?

FT Alphaville - when commodity collateral shenanigans go wrong. Izzy Kamizzy jumps on the China gold collateral story. She thinks it'll have more of an impact on dollar liquidity in China.

FT Beyond Brics - speculating on Modi's budget. Well, he seems to want to talk directly with foreign companies to address their problems with locating in India, and that's good.

Gold Report - Lawrence Roulston interview. If you're interested.

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