Reuters: China banks, regulators move to cool gold rush (halts PM trades)
Azurescens
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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.
Comments
COMEX is imploding
(Communist Exchange)
Its insane to me you hear people argue oh hey it's not like a ton of people own paper.. things can't be that bad theres tons of us with physical...
and then go log onto reddit or more mainstream type metals forums and a bunch of people are waxing poetic about not having physical control of a physical asset. It's insane to me, and I'm insane!
A very many number of people are in for a rude awakening.
I guess some are already waking up to that reality.
Paper holders: Good luck taking delivery. There's probably hundreds of paper ounces for each 1 physical ounce sitting in a vault somewhere in a bunker of a non descript building.
100% Positive BST transactions
Paper trading metals satisfies the urge to go to the casino & play cards or toss the dice. Some people need the rush.
In 08-10, I remember rolling my eyes hearing people eloquently describe how they dont have access to their investment. I had sold some 90% and got in some monster boxes before things really took off. I remember sitting there thinking well, at least they're only being foolish now, and this paper scam is gonna come tumbling down faster than Norfed.
It is beyond me how it has lasted another 10 years. There must be some big money behind these things holding considerable influential power. I'm tired of reading how awesome they are. it is everywhere and it is bad and a horrible idea, and has been, for a decade.
Some of the people who have chosen it as their hill to die on are some of the internets most insufferable trolls, which then makes me think they're either bots or troll farms propping this crooked system up.
A year ago I would've thought that to be crazy talk. Now...? Hmm.