China central bank warns of risks in illegal gold futures speculation

October 24, 2008 by · Leave a Comment
Filed under: Commodities News 

Looks like a secondary market is developing for the gold market in China.  With the paper price of gold bullion a far cry from the “street-price” that you would great if you walked into a dealer to purchase.  We will likely see more of this as long as there is manipulation in the markets in general.

News Piece:

The People’s Bank of China said on Thursday that “underground gold futures speculation” was “typical illegal trading on gold futures” and was not protected by law.  The central bank warned Chinese investors of the extremely high risks in illegal futures trading.

Illegal gold futures trading is reported to have cost Chinese investors at least 100 billion yuan (14.6 billion U.S. dollars).

The illegal gold futures trading operates in two main ways: local companies working as agents for domestic institutions and individuals to help them invest in overseas gold futures; companies providing services in gold trading and demanding investors deposit money in designated accounts in a variant of margin trading.

The central bank said Chinese investors could conduct real gold trading through domestic commercial banks, or invest in gold futures through the Shanghai Gold Futures Exchange.

The central bank said it would improve supervision of gold trading and enhance education among investors to raise awareness of the risks.

Source: China View

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