At present, up to 12 trillion yuan stays in domestic residents' saving accounts. The launch of individual gold investment, therefore, will allow residents to change currency assets into gold assets. At the macro level, it will expand channels for changing savings into investment, thus adjusting the money supply; in the micro aspect, allowing citizens to trade and keep gold can improve social welfare, benefiting both the country and the population. Moreover, with the dual attributes of common commodity and currency commodity, gold is a desirable instrument for hedging. Therefore, developing gold trade for individuals is practical." Zhou Xiaochuan, Governor, the People's Bank of China. Shanghai stocks have fallen over 30% since mid-June. The equivalent in U.S. terms would be for the DJIA to fall 6000 points to the 11,000 level a crash by any definition. Most of the commentary on this important subject has centered around the potential contagion effect for stock markets in the rest of Asia and beyond. There is another aspect to the crash worth considering though, and that has to do with the effect it will have on Chinese gold demand. The Chinese people, it is well known, already have a cultural affinity to gold. That attachment just received a shot of adrenaline. Prior to June, trading volumes on the Shanghai Gold Exchange (SGE) were already running 20% higher than the previous year. Now, with crash psychology affecting thinking up and down the spectrum of investors, SGE is reporting volumes off the charts. In early July, Want China Times reported that "SGE posted a record trading volume of 48.33 million grams in a single day in late June." (48.3 metric tonnes, a big number.) http://chinabullion.blogspot.com.au/2015/07/the-shanghai-stock-market-crash-and.html
If that's an accurate attribution to Zhou Xiaochuan then that's s pretty big turtling deal, a really big ninja turtling deal. Of course it's just a quote but can you imagine if Yellen said that?
I remember an article on Chinese govt actively recommending its citizens purchase gold and silver, also news and images of lines of people coming out of bullion stores waiting to purchase. Unsure of any restrictions - in fact i think i remember even loss leader promotions silver coins for the public 1 per person type so they so to be very pro the public stacking and accummulating.
Economy propped up by 'money created from thin air' Research director at the Beijing-based J Capital Research Anne Stevenson-Yang said the collapse has exposed the potential overstatement of the Chinese economy and pointed to its reliance on debt. "The stock market expansion is the most naked expression yet of the way in which Chinese authorities have created money in order to suspend in air the edifice of debt that is the economy, even as real spending, real production, total factor productivity, and the quality of life for Chinese citizens spiral into decline," Ms Stevenson-Yang wrote in a recent note to clients. "The roughly 24 trillion yuan - $US3.8 trillion ($5.2 trillion) - added to the value of traded shares over the last year did not come from new value created by the companies, which have seen earnings decline, most of the money was created from thin air." That creation of liquidity has seen funds funnelled from the PBoC, the Ministry of Finance and large commercial banks to the brokers and smaller, weaker financial institutions such as local banks and rural co-operatives. Ms Stevenson-Yang said the government panic on display with the A-share market crash was primarily due to the threat of a major financial crisis, not collapsing share valuations. "The emergency measures implemented throughout last week may forestall, but will not prevent it - in fact, they might speed its arrival," she warned. Systemic risk to the economy Credit Suisse's chief regional economist in China, Dong Tao, also noted that the sharp rise and fall of the equity markets now posed real systemic risks that could feed into the real economy. The heart of the problem is the debt-fuelled binge that has blown up the Chinese equity bubble. ABC news
