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China Cracks Down on Gold Exchanges

Commodities / Gold and Silver 2011 Dec 27, 2011 - 12:41 PM GMT

By: Eric_McWhinnie

Commodities

Governments hate competition. Due to record breaking gold prices this year, more unauthorized gold exchanges have been created to capitalize on gold fever. However, China regulators are not happy about the competition.

A joint statement issued by People’s Bank of China, the Ministry of Public Security and other regulators recently announced, “No local authority, institution or individual is allowed to set up gold exchanges.” In essence, gold exchanges in China, except for two in Shanghai are to be banned. The joint statement also explained that the Shanghai Gold Exchange and the Shanghai Futures Exchange are sufficient enough to meet domestic investor demand for spot gold and futures trading.


Reuters explains, “The PBOC cited lax management, irregular activities and evidence of illegality which were causing risks to emerge, as the reasons for taking the decision. The central bank said it would lead a team to clear up the mess — gold exchanges will be altered or closed, banks will stop providing clearing services to them; and some people will be put under police investigation.”

The move serves as a reminder to precious metal investors that gold and silver remain to be a focus in a world of fiat currencies. In addition to tighter gold exchange oversight, China is making agreements to distance itself from the U.S. dollar. Earlier this week, Bloomberg reported, “Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for the exchange, to cut costs for companies, the Japanese government said. Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement.”

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

By Eric_McWhinnie

http://wallstcheatsheet.com

Wall St. Cheat Sheet : Only days after the S&P 500 crashed to the depths of hell at 666, the Hoffman brothers launched Wall St. Cheat Sheet: one of the fastest growing financial media sites on the web. Like a samurai, our mission is to cut through the bull and bear shit with extraordinary insights, a fresh voice, and razor-sharp wit. We provide the highest quality education and information for active investors, financial professionals, and entrepreneurs.

© 2011 Copyright Eric McWhinnie - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors


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