Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

China May Fight Inflation With Reserve Ratio Move – Bearish for Gold ?

IMG Auteur
Published : August 30th, 2011
321 words - Reading time : 0 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Opinions and Analysis

 

 

 

 

Bloomberg News reported this morning that China May Limit Inflation With Reserve-Ratio Move Locking Up $140 Billion.

As I mentioned last night, Liquidity would be the reason that would take gold down with it. A liquidity crisis doesn’t spare any asset class.

More From Bloomberg:

Reserve requirements are being extended to customers’margin deposits, a move that may drain 900 billion yuan ($140 billion) from the banking system over six months, Bank of America Merrill Lynch economist Lu Ting said in an e-mailed note on Aug. 26. Mizuho Securities Asia Ltd. cited similar information. A central bank press official declined to comment.

China has already raised reserve ratios to a record 21.5 percent for the biggest banks to counter the fastest inflation since 2008. London-based Capital Economics Ltd. said that the reported move may mean no further increases this year, after previously anticipating another 1 percentage point gain by the end of December.

“It’s not surprising to see such a move from the Chinese government, as it is facing a big trade surplus and inflation pressure,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking group Ltd. “The move will further tighten liquidity,’” he said

….

The six largest Chinese banks need to start setting aside cash equal to as much as 21.5 percent of their margin deposits from Sept. 5, and complete reserves within three months, said Shen, citing information obtained from his investor contacts. Smaller banks will be given a requirement of 19.5 percent starting Sept. 15, with a five-month grace period, he said.

My initial lean would be that this is bearish for gold if the reserves are raised through selling of the metal to raise these reserves. Furthermore, if inflation is tamed then gold, seen as a hedge against inflation may suffer. The operative word is MAY because I felt that a correction in gold was overdue anyway. This might simply contributed to it.


 

 

Data and Statistics for these countries : Hong Kong | New Zealand | All
Gold and Silver Prices for these countries : Hong Kong | New Zealand | All
<< Previous article
Rate :Average :0 (0 vote)
>> Next article
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
A Salvo in the Battle for the Go...
27 Febovertheedge
I would argue that the devil is in the details, i.e. the definition of money. What the people of the US are using is currency. Currency bei...
A Salvo in the Battle for the Go...
26 FebFrankinca1
Sort of written for a PHD in economics, which gold believers (myself) are not often that well educated, have difficulty following. The definition o...
A Salvo in the Battle for the Go...
26 Feb07788525833
The dollar has a monopoly over all other types of money which is rammed down peoples throats by gun and drones , any one wanting to change this...
In Search of the Magic Wand: Car...
25 FebDoom
Yes, stay away from University of Phoenix, a school with a 9% graduation rate, that only gets students because it spends $200,000 a day on Google a...
Emails From Kiev: Free Speech Va...
25 Febovertheedge
"The problem is, the asshats associated with Poroshenko are even worse than he is." I'm assuming you mean the predators in the US White Ho...
The Bull Case For Gold This Year...
25 Febdepourcq
You talked about all the wrong reasons that gold will rise or fall, their is only one that everyone should know. The US has a debt of 18.134 trilli...
The Bull Case For Gold This Year...
25 Febneville
The fact that you are very lowly rated might be one of two things .1.You have been playing this card to often (Bear Joker) 2,The other is that you ...
Interventionism Kills: Post-Coup...
24 FebJosu O.
A nice summary of what actually happened. It's sad that few europeans and even fewer americans are going to read it. My opinion is that US...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Tinka Resources(Ag)TK.V
Announces AGM Results
CA$ 0.27-12.90%Trend Power :
Corporate news
Silver Standard(Ag-Au-Cu)SSO.TO
Early Glance: Silver companies
CA$ 6.57-0.90%Trend Power :
Corporate news
Pan American Silver(Ag-Au-Cu)PAAS
Early Glance: Silver companies
US$ 9.68+1.04%Trend Power :
Corporate news
Gold Fields(Cu-Ni-Mo)GFI
Early Glance: Gold companies
US$ 4.65+0.87%Trend Power :
Corporate news
Randgold Res.(Au)GOLD
- Total Voting Rights
US$ 79.19+0.24%Trend Power :
Corporate news
Continental Precious Min.(Ag-Au-Co)CZQ.TO
Engages Golder Associates for the Next Step in the Development of the Viken Project
CA$ 0.56-6.67%Trend Power :
Corporate news
Beaufield Res.(Ag-Au-Ni)BFD.V
Reports Annual General Meeting Results
CA$ 0.04-11.11%Trend Power :
Corporate news
Probe Mines(Ag-Au-Cu)PRB.V
Leading Independent Advisory Firms ISS and Glass Lewis Recommend Shareholders of Probe Mines
CA$ 4.94+0.82%Trend Power :
Corporate news
Newmont(Cu-Le-Ni)NEM
Why the Earnings Streak Will Continue for Newmont Mining (NEM) - Tale of the Tape
US$ 26.33+0.08%Trend Power :
Corporate news
Newmont(Cu-Le-Ni)NEM
Increased Earnings Estimates Seen for Newmont Mining (NEM): Can It Move Higher? - Tale of the Tape
US$ 26.33+0.08%Trend Power :
Corporate news
Comments closed
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.