BullionStar News
Writers Torgny Persson, Koos Jansen
& Hong Kang See

Chinese Gold Financing Deals Explained

Thursday the 5th of March 2015
One of the main causes many gold analysts assume Chinese gold demand (and withdrawals from the vaults of the Shanghai Gold Exchange) is inflated is because of Chinese Commodity Financing Deals (CCFD). However, this analysis is incorrect.

When I had discussion the other day with a colleague about how round tripping gold flows in China were completely separated from the Chinese domestic gold market and the SGE, I send him a link to a post I had written on round tripping that explains everything. When I clicked the link myself and read my post (from May 2014) I was of the opinion my writing skills have improved since I wrote it. Time to write a thorough new post on round tripping and other Chinese gold financing deals! Most likely I will rewrite more posts on the mechanics of the Chinese gold market.

Round Tripping


Most CCFD are ways for Chinese speculators to acquire cheap funds using commodities as collateral. When it comes to using gold as collateral for CCFD there are two options, round tripping and gold leasing. What is round tripping? Goldman Sachs wrote a report in which the process was properly explained. For this post we will not examine other commodities than gold. From GS:
While commodity financing deals are very complicated, the general idea is that arbitrageurs borrow short-term FX loans from... Continue Reading
By: Koos Jansen
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