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Chinese Gold Lease Market And Chinese Commodity Financing Deals Explained

BullionStar This post is part of the Chinese Gold Market essentials series. Click here to go to an overview of all Chinese Gold Market Essentials for a comprehensive understanding the largest physical gold market globally. The main arguments presented by Western consultancy firms, such as GFMS and the World Gold Council (WGC), to explain the difference between SGE withdrawals and Chinese consumer gold demand relate to Chinese Commodity Financing Deals (CCFDs). However, this analysis is incorrect as I will demonstrate in this post. CCFDs are used by Chinese speculators to acquire cheap funds using commodities as collateral. When it comes to using gold as collateral for CCFDs there […]

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Principles and a Chinese Bezos (Macro Musings)

The following is a sample of our weekly Friday Macro Musings — a list of what our team is reading/studying/trading this week. Our Recent Articles/Interviews — Financial Sense Podcast  – I did a short chat with Chris Sheridan on the Financial Sense podcast last week. Archimedes Dollar Smile – I dig into the greenback and take a look at where it might be headed. The Gold Bugs Were Wrong – Tyler talks why buyers of gold have been wrong since the inception of QE. And asks, were they wrong or early? China Won’t Roll Over Until Liquidity Tightens – Tyler […]

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The Chinese Global Economic Strategy

In the fall of 1993, I was sitting in class in grad school. We were using case studies to explore business management decisions. My professor walked through the history of Otis Elevators, noting that the company had reached market saturation and had choices to make. I was sort of paying attention… sort of not. Then he called on me. “Rodney! What should a company do when it reaches market saturation?!” I fumbled. “Develop a new product or service?” He thundered back, “Find another market!” His point was that Otis Elevators had saturated the U.S. market, but had all of Europe […]

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Estimated Chinese Gold Reserves Surpass 20,000t

BullionStar My best estimate as of June 2017 with respect to total above ground gold reserves within the Chinese domestic market is 20,193 tonnes. The majority of these reserves are held by the citizenry, an estimated 16,193 tonnes; the residual 4,000 tonnes, which is a speculative yet conservative estimate, is held by the Chinese central bank the People’s Bank of China. I’m aware I’ve been absent from writing about the Chinese gold market for a long time, so for some of you it can be burdensome to pick up where we left a few months ago. It is not feasible for […]

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NOVEMBER: Gold Price Down, Chinese Demand Strong Despite Import Curbs

BullionStar From the moment Donald J. Trump got elected as the next President of the United States, on November 8, 2016, the price of gold tumbled 8 % in the remainder of the month – from $ 1,282 USD/oz to $ 1,178 USD/oz. Usually these cascades in the gold price go hand in hand with physical sell-offs in the West and strong demand Asia. It appears November has been no exception. The volume of physical gold withdrawn from vaults of the Shanghai Gold Exchange (SGE) in November accounted for 215 tonnes, the highest amount in ten months. Year to date SGE withdrawals […]

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Synthetic Gold Leasing: More Details Regarding The “Precious Metals” On Chinese Commercial Bank Balance Sheets.

BullionStar More proof the “precious metals assets” on Chinese commercial bank balance sheets have little to do with the “surplus” gold in China’s domestic market. One of the topics about the Chinese gold market that has not been fully illuminated is the “gold” on the 16 Chinese commercial banks’ balance sheets. At the end of 2015 the aggregated “precious metals assets” on the bank balance sheets accounted for 598 billion yuan (RMB), which translates into approximately 2,682 tonnes of gold – if all the precious metals were gold related, which is very likely. In my previous post on this subject we learned from examining the banks’ […]

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The Chinese Yuan and a Global Tipping Point

Every market cycle has 1 to 2 macro drivers at the heart of its regime. We call these the fulcrum points. Keep an eye on the fulcrum and you’ll know when a major cyclic turn is underfoot. The fulcrum point for the current cycle is without a doubt the US dollar (UUP). The dollar is sitting on top of a $ 9-$ 11 trillion powder keg of foreign carry trades — essentially short dollar positions. And the torch that’s likely to set off this powder keg of deflation is the Chinese yuan (FXI). A depreciating yuan equals a stronger dollar. […]

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Fed Worries of “Eroding Credibility”; Gordon Chang on the Chinese Economy

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason. There’s been some big news out of China lately, and today we’ll dive deeper into the discussion when we hear a recent interview I did with Gordon Chang. Mr. Chang is one of the foremost experts on the Chinese economy and has written a book titled The Coming Collapse of China. He’ll tell us why he believes an epic collapse is imminent and what it all means for the Western financial world and why he believes there is what he calls a Chinese floor on the gold price. Don’t miss […]

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What Are These Huge Tonnages In “Precious Metals” On Chinese Commercial Bank Balance Sheets?

BullionStar There has been much conjecture since 2014 about the increasing numbers in the “precious metals” category on the balance sheets of listed Chinese commercial banks. By the end of 2015 China’s largest banks were holding RMB 598 billion in precious metals. Some analysts think that the precious metals on Chinese commercial bank balance sheets are gold reserves purchased on behalf of the Chinese central bank, while others surmise that Chinese banks buy gold at the Shanghai Gold Exchange (SGE) and then lend it out so the precious metals on the balance sheets solely represent leased gold. In latter analysis […]

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Spectacular Chinese Gold Demand 2015 Fully Denied By GFMS And Mainstream Media

BullionStar Debunking the Thomson Reuters GFMS Gold Survey 2016 report. New information provides a more detailed perspective on the Chinese domestic gold market.  In the Gold Survey 2016 report by GFMS that covers the global gold market for calendar year 2015 Chinese gold consumption was assessed at 867 tonnes. As Chinese wholesale demand, measured by withdrawals from Shanghai Gold Exchange designated vaults, accounted for 2,596 tonnes in 2015 the difference reached an extraordinary peak for the year. In an attempt to explain the 1,729 tonne gap GFMS presents three brand new (misleading) arguments in the Gold Survey 2016 and reused […]

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