Author Topic: China Clamps Down on Gold Trading Frenzy  (Read 1558 times)

0 Members and 1 Guest are viewing this topic.

Offline exchange

  • Trade Count: (0)
  • Hero Member
  • *****
  • Posts: 1178
  • Karma: 20
China Clamps Down on Gold Trading Frenzy
« on: December 27, 2011, 09:38:08 AM »
Gold exchanges in China outside of two in Shanghai are to be banned, authorities said in a statement released on Tuesday.

Gold exchanges have mushroomed across China, from the northern port city of Tianjin to Guangxi bordering Vietnam, as spot prices in the precious metal [XAU=  1594.55    -10.41  (-0.65%)   ] have soared to record highs and speculation has boomed.

"No local authority, institution or individual is allowed to set up gold exchanges," said the notice dated December 20 and jointly issued by the People's Bank of China, the Ministry of Public Security and other regulators.

The notice — published on the central bank website (www.pbc.gov.cn) — said the Shanghai Gold Exchange and the Shanghai Futures Exchange are enough to meet domestic investor demand for spot gold and futures trading.

Existing exchanges or "platforms" were told to stop offering new services.

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, PBOC said.

An official at the Beijing Gold Exchange Center, who declined to be identified, told Reuters over the phone that the exchange has not received any detailed instructions.

"But the talk of a crackdown has been going on for a while," he said. "Of course, this affects our business."

http://www.cnbc.com/id/45794782


exchange

Offline SANDAC

  • Supporter
  • Global Moderator
  • Trade Count: (+8)
  • Hero Member
  • *****
  • Posts: 2264
  • Karma: 118
Re: China Clamps Down on Gold Trading Frenzy
« Reply #1 on: December 27, 2011, 12:12:06 PM »
I read that, but I'm not sure what that really means.  I assume, first and foremost, that this new rule has no impact on the selling/buying/trading of collectible gold between private individuals and local shops, that this rule only regulates the rate a local exchange can charge for gold trade?

Offline exchange

  • Trade Count: (0)
  • Hero Member
  • *****
  • Posts: 1178
  • Karma: 20
Re: China Clamps Down on Gold Trading Frenzy
« Reply #2 on: December 27, 2011, 12:28:21 PM »
I read that, but I'm not sure what that really means.  I assume, first and foremost, that this new rule has no impact on the selling/buying/trading of collectible gold between private individuals and local shops, that this rule only regulates the rate a local exchange can charge for gold trade?

I myself am not sure, but pretty confident it does not apply to collectibles. A couple of reasons come to mind why the Chinese may not want several gold exchanges.

1) Having more exchanges may mean having more contracts for paper gold. Having to much paper gold and not be backed by physical gold may be a problem the Chinese want to avoid.

2) Both the Shanghai Gold Exchange and the Shanghai Futures Exchange have very close ties with the Chinese government. :)

exchange

Offline badon

  • Trade Count: (0)
  • Hero Member
  • *****
  • Posts: 4487
  • Karma: -81
Re: China Clamps Down on Gold Trading Frenzy
« Reply #3 on: January 11, 2012, 09:48:11 PM »
I agree with Exchange on both points. The Chinese government wants to avoid unsustainable risk-taking that could trigger an economic "event" that would affect the rest of the economy in China. And, they want to know who has the money, and how much.