The news would spark a brief wave of outrage, prompting physical gold holders to run ultrasound spot checks of their inventory, at which point interest would wane and why not: buyer, after all, beware in gold as in every other market, and if someone is spending thousands to buy fake gold, well that's Darwinism in action.
One market which seemed stubbornly immune to any counterfeiting was that of physical gold in China, which was odd considering that over the past decade China had emerged as the world's biggest counterfeiter of various, mostly industrial metals used to secure bank loans, better known as "Ghost collateral", and which adding insult to injury, would frequently be rehypothecated meaning often several banks would have claims to the same asset.
Well, apparently everything as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper.
Well, what else could he say.... As Caxin notes, the Kingold counterfeiting case echoes China's largest gold-loan fraud case, unfolding since 2016 in the northwest Shaanxi province and neighboring Hunan, where regulators found adulterated gold bars in 19 lenders' coffers backing 19 billion yuan of loans, or about USD $2.5 billion.
The 83 tons of purportedly pure gold stored in creditors' coffers by Kingold as of June, backing the 16 billion yuan of loans, would be equivalent to 22% of China's annual gold production and 4.2% of the state gold reserve as of 2019.
The above story is shocking in exposing just how multi-faceted fraud is in China: capitalizing on pre-existing cronyism and connections with China's powerful army, the founder of Kingold was allowed to basically do anything he wanted, no questions asked, including counterfeiting over 83 tons of gold bars to get billions in funds to participate in China's housing bubble, only for a series of unexpected events to unwind the frauds one after another and expose the type of sordid scandal that is at the heart of most Chinese "Enterprises" and business ventures.
As for what this means for the price of gold... well, Kingold is certainly not the only Chinese company engaging in such blatant gold fraud, and the consequences are simple: once Chinese creditors or insurance companies start checking the validity of their collateral and discover, to their amazement, that instead of gold they are proud owners of tungsten or copper collatera, they have two choices: reveal the fraud, risking tremendous adverse consequences, or quietly buy up all the gold needed to literally fill the void from years of gold counterfeiting.
One market which seemed stubbornly immune to any counterfeiting was that of physical gold in China, which was odd considering that over the past decade China had emerged as the world's biggest counterfeiter of various, mostly industrial metals used to secure bank loans, better known as "Ghost collateral", and which adding insult to injury, would frequently be rehypothecated meaning often several banks would have claims to the same asset.
Well, apparently everything as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper.
Well, what else could he say.... As Caxin notes, the Kingold counterfeiting case echoes China's largest gold-loan fraud case, unfolding since 2016 in the northwest Shaanxi province and neighboring Hunan, where regulators found adulterated gold bars in 19 lenders' coffers backing 19 billion yuan of loans, or about USD $2.5 billion.
The 83 tons of purportedly pure gold stored in creditors' coffers by Kingold as of June, backing the 16 billion yuan of loans, would be equivalent to 22% of China's annual gold production and 4.2% of the state gold reserve as of 2019.
The above story is shocking in exposing just how multi-faceted fraud is in China: capitalizing on pre-existing cronyism and connections with China's powerful army, the founder of Kingold was allowed to basically do anything he wanted, no questions asked, including counterfeiting over 83 tons of gold bars to get billions in funds to participate in China's housing bubble, only for a series of unexpected events to unwind the frauds one after another and expose the type of sordid scandal that is at the heart of most Chinese "Enterprises" and business ventures.
As for what this means for the price of gold... well, Kingold is certainly not the only Chinese company engaging in such blatant gold fraud, and the consequences are simple: once Chinese creditors or insurance companies start checking the validity of their collateral and discover, to their amazement, that instead of gold they are proud owners of tungsten or copper collatera, they have two choices: reveal the fraud, risking tremendous adverse consequences, or quietly buy up all the gold needed to literally fill the void from years of gold counterfeiting.
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