China banks, regulators move to cool gold rush

[zectech]

China banks, regulators move to cool gold rush

SHANGHAI (Reuters) - Chinese regulators and major banks are rushing to curb precious metal trading by domestic investors to temper speculation that some fear could cause a repeat of this year’s oil trading mishaps.

The scramble to limit risks comes as gold prices hit record highs this week, spurred by investors hunting for safe haven assets in markets rattled by worries of rising coronavirus cases, lofty equity valuations and a falling U.S. dollar.

A deepening rift between the United States and China has also become a factor drawing mainland investors to gold.

Industrial and Commercial Bank of China (ICBC), the country’s biggest lender, said on Wednesday it would bar its clients from opening new trading positions for platinum, palladium and index products linked to precious metal from Friday. That directive, according to the lender’s customer service department, was in response to “violent price volatility” and “the need to control risks.”

Agricultural Bank of China said it had recently suspended new businesses related to gold, while Bank of China said it halted new account openings for platinum and palladium trading.

The Shanghai Gold Exchange said on Tuesday gold and silver holdings were high, and it would take risk-control measures if warranted to protect investors.

The Shanghai Futures Exchange, where gold and silver futures contracts are traded, also urged its members to strengthen risk-management efforts and invest rationally.

“Gold remains a niche investment in China due to limited investment channels,” said Frank Hao, an analyst at Hywin Wealth Management in Shanghai. “Investors mainly rely on purchasing paper gold products at commercial banks as a way to counteract risks.”

Chinese investors are also actively trading gold ETFs, whose turnover has jumped in recent weeks.

Huaan Gold ETF, Asia’s biggest gold exchange-traded fund, has seen its assets under management soar more than 68% to over 11.8 billion yuan ($1.69 billion) since end-2019.

Regulators are mindful of risks after investors were caught off-guard in late April when Bank of China settled a crude oil futures trading product known as Yuan You Bao at minus $37.63 per barrel, following a historic slide in oil prices into negative territory.

The bank subsequently agreed to settle with more than half its customers facing losses, potentially taking a 6 billion to 7 billion yuan hit.

Hao said any further gains in gold may spur more speculation, despite regulatory attempts to tamp it down.

“If the gold price rises past $2,000, some more hot money will certainly flow into the market, and some investors will divert their stock investments to gold,” he said.
https://www.reuters.com/article/us-...gulators-move-to-cool-gold-rush-idUSKCN24U1C4

 

[zectech]

Chinese have no idea how to drive up gold prices. Buying paper silver and gold, creates new paper fake gold and silver, there is billions, perhaps trillions in fake paper gold that eats up demand, while the supply of gold and silver sit in some vault, unchanged by the rising demand of paper silver and gold.

Imagine there are 4 million barrels of oil produced every day, and everybody, including refineries, only buy paper oil. They don't take delivery. They speculate in paper, ETFs, and derivatives. What is the price of oil going to be for physical oil being sold by oil companies. Bidding $5 a barrel. Any buyers. $4 a barrel. Any buyers. Everybody only invests in paper oil, nobody takes delivery. Anybody hear $3 a barrel. 2, 1, free oil, anybody take $1 and a barrel of oil. Anybody take $2 and a barrel of oil. Anybody take $3 and a barrel of oil. If there are no bidders of physical oil, long investors lose.

Same happening with physical gold, not only if you don't hold it, you don't own it. If you are not buying physical, and are buying paper, you are wasting your investment. Imagine buying Tesla stock and accepting a piece of paper that is not backed by Tesla in any way. You are diluting the shares of Tesla, by this buying of paper Tesla stock that is in no way Tesla stock. Even if you are buying ETFs that have physical gold in their vaults, they accept short positions on that physical gold, which ruins your long positions. Taking possession of precious metals, means you are really going long.

To make money on the paper market of oil and other commodities, you have to have inside knowledge of the traders in London, NY and Chicago. Or be a savy investor.

Chinese lost money on oil bets because they do not not take delivery. They would have made money if they take delivery in that they would have gotten their oil.

Buy gold coins from the Chinese mint if Chinese want to invest in gold, create a shortage of gold and silver. Shortages raises the price and paper goes *poof*. Either the shorters win in that paper goes to zero in a market scam burst or paper goes up with physical gold and silver prices and the banks loose their shorts and every bank shorting paper gold and silver go bust.

Taking delivery of the commodity you are investing in is very important if you are long.

If you are in paper going long, you are almost automatically in a short position. You invented new gold paper, back not by gold, not by anything, it is a piece of paper. You are creating new demand, and supply in paper gold and oil. You are defeating the purpose of long investing in not taking delivery.

Think of buying gold and silver as buying an Italian sports car, you want cheap prices to stockpile.

And since you can't take delivery of oil and tons of copper, sane investors buy only precious metals and those who want gold to go higher, take delivery in buying from the supply of precious metals.

Since you want to buy when gold and silver are low, China should buy about 30 million euros (about a half ton) worth of physical gold every day for central holdings. And when there are lows and dips, buy more. Do this for the whole precious metals group and some other metals.

 

[zectech]

There was once paper gold in the US, called federal reserve notes, that were actually backed by gold. In the 1930s, they were no longer redeemable for gold, fast forward to today, they are worth 1/10 their value, and any value is due to historical reasons as collectables.

Now investors are buying worthless pieces of paper as gold and silver at physical gold and silver prices. And these worthless paper gold and silver, are not collectable, nor redeemable for gold on demand nor can you take delivery of physical gold.

If the paper markets collapse due to physical shortages in the trading boards, banks win with paper going to zero. If paper rises with physical gold, banks lose their short positions and huge margin calls are hit for banks.

I don't know what is more funnier, the banks collapsing or those paper investors losing their investments, when they were simply tools of the banks scheme.

You have the freedom to own the wealth of kings, gold and silver, and you take paper. lol.

This is what is suppressing the price of gold. Nobody taking delivery, happy with paper.

Central Banks hate high physical gold demand, they hate high physical silver demand. That is why the CiA invented bitcoins to sap investment from libertarians from gold to CiA bitcoins. And the CiA hates Etherum, because that currency is the anti-bitcoin.

 

[zectech]

The Danger of Paper Gold

https://internationalman.com/articles/the-danger-of-paper-gold/
by Jeff Thomas

Recently, a reader of International Man responded to an IM article regarding the danger of trusting banks (or anyone, for that matter) to hold gold in their names. He said, “How would a bank sell gold to a client and the client not take delivery? This seems strange to me.”

For those of us who have held gold for decades and have therefore had the advantage of watching the gold market develop with a seemingly endless number of permutations of ownership, the answer might seem obvious. However, his question is a reminder that there exists a great variance in the level of knowledge as to what, on the surface, seems to be a simple act – buying gold.

To those who are new to gold ownership (and I believe their numbers will soon be increasing exponentially), it would seem perfectly reasonable that gold could be purchased as simply as buying any commodity. If, for example, someone were to want to buy an apple, he would simply go to the grocery store and pay the price marked on the apple bin. If, however, he wanted quite a lot of apples, he might go to several stores and have a look at the prices marked, then choose the lowest price. Looked at from this perspective, it seems perfectly reasonable that the purchase of gold would not be significantly more complicated.

However, our local grocer, unfortunately, does not have bins full of Krugerrands and Maple Leafs with prices marked above them. While we sometimes have the opportunity to buy gold from private parties or coin dealers in which a selling price is stated up front, most gold purchases are done through middlemen (banks, investment funds, etc.) who do not actually own the gold they are selling. The middlemen, understandably, are forever seeking ways to maximise their profits on the transactions, and this has led to the number of permutations that exist today.

Risky Business

One of the most risky of these, to my mind, is the Exchange Traded Funds (ETFs), investment funds traded on stock exchanges. Not surprisingly, this method of purchase is the favourite of stock brokers. It is an easy sell for them, since it is structured the way stocks are structured. It therefore seems safe to stock investors. It is not.

With most stocks, the buyer owns a portion of the company, rather than a specific number of the products that the company deals in. When investing in a fund, the fund generally owns a portion of the companies it has invested in. With buying gold through ETF's, however, the buyer is under the impression that he has bought the actual product, when he has not. In many cases, the fund does not have possession of the gold. Therefore, the buyer has bought the “promise” of future ownership.

The first step for many first-time buyers is to say to himself, “I don't know much about this gold craze, but I'm getting worried, and I'm beginning to believe that gold can give me a measure of security. I'll go to my broker and ask him what I should do.” When the broker gives him the “inside scoop” on the best ETF, the buyer may say, “What do I do with the gold? How do I store it?” He is likely to be advised, “Don't worry, the fund handles all of that. You won't actually have to deal with the physical gold at all. You just benefit as it goes up in value.”

At this point, the new buyer has the answer to the question asked by the reader in the first paragraph of this article… or at least he has an answer that sounds reasonable to him. He is, however, buying into a scheme that, to my mind, is almost guaranteed to lose his investment for him.

When the Bottom Falls Out

The trouble with ETF's is that, since the fund may not actually purchase the gold, since they have only issued a promise to purchase the gold if it becomes necessary, the fund only works as long as gold trading remains fairly stable. If, however, there is ever a rush on the part of purchasers to take delivery of their gold, ETF's will be the first to go under.

Why?

Because at this point, banks worldwide, stock traders, bullion dealers and others are all offering gold for sale. Most of them do not actually buy and store the gold as their clients purchase it. Banks, for example, typically operate under a Fractional Reserve system, which means that they maintain only a small portion of what they have agreed to supply.

If, for example, each bank were to hold only 10% of the gold it has sold (10% is a commonly accepted banking standard, although many banks hold nowhere near that amount), they make a handsome profit by selling gold without ever actually purchasing it. Since this is standard practice amongst the banks and other financial institutions, funds, etc., it is entirely possible that the total amount of gold that has been sold worldwide greatly exceeds the amount of gold that exists in the world.

The reader above might then be inclined to say, “But that can't be. They must know that they are taking a terrible risk.” There can be little doubt that those who sell gold which they do not possess are very aware of the risk. The layman might imagine that they would stop selling gold, but this has not been the case. What they have done instead is cover themselves for the eventuality of a run on gold.

Whenever anyone is considering buying gold, he should first look at the paperwork very carefully. Almost invariably, he will find disclaimers that allow the seller an “out” if the scheme fails. Sometimes the fine print will state that all that is being sold is a promise. In other cases, it will say that the seller makes use of an outside facility for storage, and the buyer is therefore subject to the conditions of that storage facility. If the buyer were to request a copy of that agreement he might find that the terms of the “storage facility” amount to only a promise to purchase. (Incredibly, this is now the case with one of the world's most trusted national mints where large-volume buyers believe their gold to be stored for them.)

So, considering the above, is there a safer way to buy gold? Yes, “safer”, but not necessarily “safe”.

“Midnight Gardening” & Other Gold Storage Options

A safer way is to purchase gold through, say, one of the Swiss banks, which have a reputation for actually buying and storing the gold in your name. In particular, the Cantonal banks, which are legally restricted from having branches outside of their Cantons, offer a margin of safely from pressures brought to bear by foreign governments. However, a premium is paid for this service. The transaction costs are high, and, understandably, there is a storage charge. Additionally, in order to retrieve your gold at some point, you would have to take physical delivery, then transport it to a new destination to be sold.

Few banks are free from danger from the governments of the First World. Amongst the exceptions would be Hong Kong and Singapore.

You may wish to consider them. You may also consider taking delivery in your own country and renting a box in the vault of your local bank. This would be secure unless the bank were to fail, in which case it is possible that your gold would “disappear”. The advantage would be that, as the bank is local, you might have the opportunity to act before the bank folds.

Some people install a safe in a wall of their house, but, whoever does the installation knows that it is there. Additionally, burglars are accustomed to looking in all the standard locations. If you were to go away for the weekend, you might return to a large hole in the wall where your safe was.

You might also consider “midnight gardening”, a time-honoured method that involves digging a hole in the backyard and burying a box filled with gold. However, this is not very handy if you need to keep adding to it. Also, if the neighbours saw you bury it, you may find the hole empty one day.

You may choose GoldMoney or GlobalGold, which will buy and store your gold, or arrange delivery.

An alternative method of storage, such as Das Safe in Austria, is entirely separate of a purchase account and simply acts as storage. Again there is a downside in that, if you do not live in Austria, delivery may be problematic.

Gold Ownership: The Final Verdict

If the reader in the beginning of this article finds that his head is now swimming and that, whatever method he chooses to purchase gold, it has its inherent strings attached, he will be correct.

There is no one “safe” way to own and store gold, there are only methods that are safer than others. However, “paper gold,” that is, any gold ownership that is merely an agreement, is very risky. The ownership of physical gold is certainly better, in spite of the storage problem.

Possibly the safest thing you can do for your wealth (even if it is small) is to put a portion of your money into physical gold and keep it in a country that is amongst the least likely to suffer government confiscation or have its financial institutions fail during the coming years. While the problem of “where to put it” is somewhat discouraging, perhaps the most important question you can ask yourself is, “What if I leave my money where it is, in the form that it's in… Would that be as safe as gold?”

[If you're going to successfully internationalize – whether assets, income or personally – you'll need some good resources to do it. Join us at the International Man Network and gain access to our library of useful reports on a wide range of diversification topics from moving gold overseas or finding an international broker to getting set up on the ground in a number of different countries around the world. Click here for to join.]

 

[zectech]

Owning gold is waiting for everybody else to invest in gold to raise the price of gold. Then watch in horror as morons do what the Chinese did in investing in paper oil, inventing more supply and not taking delivery.

If the market was only physical contracts of moving physical Gold, gold would be at over 10K euros.

For silver, silver would be at over 500 euros or more.

The same thing happens with rice markets, paper and shorting and other schemes to suppress the price of rice.

There is obvious reasons why bitcoins are at 10K euros, because they are CiA approved.

The best places to buy from are from the mints, then secondarily from mega large retailers who buy direct from the mint. Best to have very large cash position to buy on dips. Gold is a investment hedge position to store wealth. And thus should be a minor aspect of your wealth.

Large investments is best during times of low prices that are near the cost of production ($1100). Profit taking or exposure during rallies, and stacking during dips.

 

[Globenim]

Chinas oil tankers and storages are full. Let the morons have their paper reports about "Chinese panic" purchases for gold and "Chinese government panic" to curb it, from the same sources that told us China was cutting down oil purchases to fabricate paper reports about Chinas "collapsing economy" just a few months ago.

 

[zectech]

Chinas oil tankers and storages are full. Let the morons have their paper reports about "Chinese panic" purchases for gold and "Chinese government panic" to curb it, from the same sources that told us China was cutting down oil purchases to fabricate paper reports about Chinas "collapsing economy" just a few months ago.

There is no panic buying when paper is suppressing the price. Gold should be in the tens of thousands of dollars of yuan, and silver should be in the thousands of yuan. Paper is used to keep prices low, so anybody can buy up silver and gold at cheap prices. These prices are high, since barely anybody takes delivery of gold, thus no creating of demand of physical gold. No demand = low prices. Until demand of physical gold increases, gold is not going anywhere.

When China wanted silver from the rest of the world

• China accepting silver for commodities would eventually result in the world’s first common currency
• The institution of the Spanish dollar – or pieces of eight – was arguably globalisation’s first chapter

https://www.scmp.com/news/china/article/2184313/when-china-wanted-silver-rest-world

Today, some insider from NYC can go to the bank, take out a near zero interest loan, and the bank invents 1 billion dollars into the account of the merchant. The merchant takes the hyperinflated dollars to China, buy 100 million hours of Chinese labour in 1 billion dollars worth of goods. Then transports them to the US, where the goods are sold for 3 billion USD. The merchant goes to the bank and pays back the loan and makes 2 bilion USD for the year.

Where is the US money from:

US prints money, China works.

Those hyperinflated dollars should be used to gradually stockpile base metals, wealth and investments at low prices. The problem is trump is threatening China with asset seizures for the US attacking China with a bioweapon. So trump has hinted that the US intends not to pay back China for their US bond holdings. If they could do an asset seizure there, they could seize corporate assets of China throughout the world for the coronavirUS US bioweapon attack. US hinted at this. Why invest in areas where the US can simply take your wealth. Slowly convert those dollar holdings to metals, base and precious and hold wealth for China that cannot be stolen, held by China, in China.

If Democrats lose in November, dump treasuries and buy metals and stockpile resources. Have a 5 year plan to decouple from any US dollar holdings that can be sanctioned and stolen. They can't steal the gold or steel, stockpiled. As I have said, most important are industrial metals. Secondarily, stockpile wealth, such as jade, gold, gemstones, anything of wealth. Don't simply go to gold. Make your economy strong as the top priority.

 

[Feng Leng]

There is no panic buying when paper is suppressing the price. Gold should be in the tens of thousands of dollars of yuan, and silver should be in the thousands of yuan. Paper is used to keep prices low, so anybody can buy up silver and gold at cheap prices. These prices are high, since barely anybody takes delivery of gold, thus no creating of demand of physical gold. No demand = low prices. Until demand of physical gold increases, gold is not going anywhere.

When China wanted silver from the rest of the world

• China accepting silver for commodities would eventually result in the world’s first common currency
• The institution of the Spanish dollar – or pieces of eight – was arguably globalisation’s first chapter

https://www.scmp.com/news/china/article/2184313/when-china-wanted-silver-rest-world

Today, some insider from NYC can go to the bank, take out a near zero interest loan, and the bank invents 1 billion dollars into the account of the merchant. The merchant takes the hyperinflated dollars to China, buy 100 million hours of Chinese labour in 1 billion dollars worth of goods. Then transports them to the US, where the goods are sold for 3 billion USD. The merchant goes to the bank and pays back the loan and makes 2 bilion USD for the year.

Where is the US money from:

US prints money, China works.

Those hyperinflated dollars should be used to gradually stockpile base metals, wealth and investments at low prices. The problem is trump is threatening China with asset seizures for the US attacking China with a bioweapon. So trump has hinted that the US intends not to pay back China for their US bond holdings. If they could do an asset seizure there, they could seize corporate assets of China throughout the world for the coronavirUS US bioweapon attack. US hinted at this. Why invest in areas where the US can simply take your wealth. Slowly convert those dollar holdings to metals, base and precious and hold wealth for China that cannot be stolen, held by China, in China.

If Democrats lose in November, dump treasuries and buy metals and stockpile resources. Have a 5 year plan to decouple from any US dollar holdings that can be sanctioned and stolen. They can't steal the gold or steel, stockpiled. As I have said, most important are industrial metals. Secondarily, stockpile wealth, such as jade, gold, gemstones, anything of wealth. Don't simply go to gold. Make your economy strong as the top priority.

The previous Chinese government, before Xi Jiniping, signed up for this scam because they wanted to export unemployment. The fear was that the rapid social changes and growing inequality in the Chinese society would lead to social unrest. By signing up to be fleeced by the Americans through dollar hegemony, the working class are kept occupied. However, the unemployed white Americans decided to elect Trump, who will blame China for being scammed.

Xi Jinping has taken steps to curb the influence of pro-US liberals within Chinese institutions. This will enhance stability. In my view, China needs a great military victory over a moderate rival such as India. Then we will take this victory and turn it into propaganda to make people proud and happy. Then we will recalibrate the economy so the women stay at home making babies leaving the jobs for the men. There won't be as many jobs available after a de-coupling so the work force needs to shrink. Each couple should be having at least two babies.

The end result is a much higher standard of living (no more American parasites) and a lower ratio of working hours versus hours spent at home (i.e. more time spent raising children).

 

[bolo]

Chinese have no idea how to drive up gold prices. Buying paper silver and gold, creates new paper fake gold and silver, there is billions, perhaps trillions in fake paper gold that eats up demand, while the supply of gold and silver sit in some vault, unchanged by the rising demand of paper silver and gold.

Imagine there are 4 million barrels of oil produced every day, and everybody, including refineries, only buy paper oil. They don't take delivery. They speculate in paper, ETFs, and derivatives. What is the price of oil going to be for physical oil being sold by oil companies. Bidding $5 a barrel. Any buyers. $4 a barrel. Any buyers. Everybody only invests in paper oil, nobody takes delivery. Anybody hear $3 a barrel. 2, 1, free oil, anybody take $1 and a barrel of oil. Anybody take $2 and a barrel of oil. Anybody take $3 and a barrel of oil. If there are no bidders of physical oil, long investors lose.

Same happening with physical gold, not only if you don't hold it, you don't own it. If you are not buying physical, and are buying paper, you are wasting your investment. Imagine buying Tesla stock and accepting a piece of paper that is not backed by Tesla in any way. You are diluting the shares of Tesla, by this buying of paper Tesla stock that is in no way Tesla stock. Even if you are buying ETFs that have physical gold in their vaults, they accept short positions on that physical gold, which ruins your long positions. Taking possession of precious metals, means you are really going long.

To make money on the paper market of oil and other commodities, you have to have inside knowledge of the traders in London, NY and Chicago. Or be a savy investor.

Chinese lost money on oil bets because they do not not take delivery. They would have made money if they take delivery in that they would have gotten their oil.

Buy gold coins from the Chinese mint if Chinese want to invest in gold, create a shortage of gold and silver. Shortages raises the price and paper goes *poof*. Either the shorters win in that paper goes to zero in a market scam burst or paper goes up with physical gold and silver prices and the banks loose their shorts and every bank shorting paper gold and silver go bust.

Taking delivery of the commodity you are investing in is very important if you are long.

If you are in paper going long, you are almost automatically in a short position. You invented new gold paper, back not by gold, not by anything, it is a piece of paper. You are creating new demand, and supply in paper gold and oil. You are defeating the purpose of long investing in not taking delivery.

Think of buying gold and silver as buying an Italian sports car, you want cheap prices to stockpile.

And since you can't take delivery of oil and tons of copper, sane investors buy only precious metals and those who want gold to go higher, take delivery in buying from the supply of precious metals.

Since you want to buy when gold and silver are low, China should buy about 30 million euros (about a half ton) worth of physical gold every day for central holdings. And when there are lows and dips, buy more. Do this for the whole precious metals group and some other metals.

The market is not Chinese forte.

 

[bolo]

The previous Chinese government, before Xi Jiniping, signed up for this scam because they wanted to export unemployment. The fear was that the rapid social changes and growing inequality in the Chinese society would lead to social unrest. By signing up to be fleeced by the Americans through dollar hegemony, the working class are kept occupied. However, the unemployed white Americans decided to elect Trump, who will blame China for being scammed.

Xi Jinping has taken steps to curb the influence of pro-US liberals within Chinese institutions. This will enhance stability. In my view, China needs a great military victory over a moderate rival such as India. Then we will take this victory and turn it into propaganda to make people proud and happy. Then we will recalibrate the economy so the women stay at home making babies leaving the jobs for the men. There won't be as many jobs available after a de-coupling so the work force needs to shrink. Each couple should be having at least two babies.

The end result is a much higher standard of living (no more American parasites) and a lower ratio of working hours versus hours spent at home (i.e. more time spent raising children).

Won't happen because CPC left wing run the show. Chinese people work hard but for almost nothing since the government keep buying American debt. The American use what you buy to buy Bytedance and other Chinese assets. America is brilliant i must say.

 

[ARMalik]

There is a saying about Gold, "If you don't hold it physically, you do not own it". People should hold physical gold because paper gold is nothing but a massive scam.

 

[Feng Leng]

Won't happen because CPC left wing run the show. Chinese people work hard but for almost nothing since the government keep buying American debt. The American use what you buy to buy Bytedance and other Chinese assets. America is brilliant i must say.

Deng and his ilk created these problems. Xi Jinping is solving them. When (not if) the US decides to freeze Chinese assets, China will also nationalize American ownership of Chinese companies.

 

[bolo]

Deng and his ilk created these problems. Xi Jinping is solving them. When (not if) the US decides to freeze Chinese assets, China will also nationalize American ownership of Chinese companies.

America will not freeze Chinese assets because that would be stupid even for Trump. There are more American companies in China than Chinese companies in America.

 

[Feng Leng]

America will not freeze Chinese assets because that would be stupid even for Trump. There are more American companies in China than Chinese companies in America.

Trump is going to default on US treasuries.

 

[bolo]

Trump is going to default on US treasuries.

No he's not because America want USD to be world dominating currency. By defaulting no other countries will buy US debt. In this situation America would lose world currency ststus. Then the USD will decline.