Euphoric Chinese Buying from Illegal Trading Firms
The China Daily is reporting that hundreds of illegal gold trading firms are taking funds from speculators with sizeable funds hoping to profit from the sudden rise in gold. According to the report, these illegal firms have little or no reserves, and are using deposited funds from speculators to cover potential losses. Further the illegal gold trading firms are using “high leverage.” The report concludes that “speculation has become rampant in the black market.” It seems that China is now experiencing the gold bubble that the U.S. experienced last summer.
Numerous China market analysts are warning of a bubble in China. Whether its stocks, real estate, or now gold, its clear that the Chinese stimulus plan has been successful in reflating its economy to dangerous speculative levels. With the risk of a China collapse increasing, understanding the impact a collapse would have on the gold market may be timely.