As everyone has been focused on the possibility that copper and iron ore might have been part of huge amount of double-finance deals in China, no one was really expecting them to turn up a massive gold fraud. According to the country’s national auditor, since 2012 Chinese companies have used fake gold transactions to obtain more than $15 billion in loans! The scam involves more than 25 processing firms and fuels even more concern over how many billions of dollars worth of commodities might be part of this same sort of financing fraud, among which could be a good deal of soybeans. To simplify this for anyone that hasn’t been following along – a significant portion of China’s raw-commodity demand has probably been part of a grander David Copperfield illusion of high-tech smoke and mirrors???
There’s starting to be some optimistic buzz in the gold market over the Indian election of Prime Minister Narendra Modi. As we all know, India has historically been a huge buyer of physical gold, but the previous government enacted prohibitive tariffs and import restrictions on the precious metal which greatly reduced the country’s buying. It’s now expected that Modi will relax the restrictions and cut the tariff, which could lead to a flurry of new buying activity. Rolling back the tariffs and changing the rules will take some time, so don’t expect to see an immediate impact, but keep in mind that analysts think added India demand could amount to 100-200 metric tons. Another optimistic outlook is if the new “business friendly” Prime Minister manages to get the country’s economy back on track, that would result in a stronger rupee, which would in turn increase Indian gold investors’ buying power. Maybe gold is setting up to breakout of it’s most recent sideways channel? Click the chart below to see a larger version.