China – Bond Collapse and Tariffs – Influence on gold and silver prices


Welcome to illuminati silver, we tell you
the truth about silver. Today is Monday 1st October 2018 and we are
briefly covering issues relating to China and their potential impact on Gold and Silver
prices. Now before we discuss this we have to admit
that there are many influences on gold and silver prices and no single influencer totally
determines their price. One of the largest influences at present is of course the value
of the US Dollar as Internationally, gold and silver prices are denominated in dollars.
Now today we are going to discuss some recent developments in China and the influence these
are likely to have on gold and silver prices. Now please be mindful, that whether these
have a positive or negative influence, does not mean that we believe that this influence
is going to determine their overall price but will nevertheless be one of the many influences.
We truly believe that the more aware you are of these events, the better the decisions
you can make for yourself in determining whether to buy gold and silver or not – the decision
is always yours, and should always be yours. The reason we are covering China is multiple
fold, but especially as it’s the second largest economy in the World and according
to official figures (and we all know these are understated to some degree) is the 6th
Largest holder of Gold Reserves in the world. In addition, along with countries like Russia
and India is in the top tier of current gold and silver buyers.
OK so now let’s take a look at what has been happening lately.
The latest PMI surveys confirmed that the weakness in China’s manufacturing sector was
accelerating. (for clarification, PMI, Purchasing Managers’ Indexes are economic indicators
derived from monthly surveys of private sector companies.) .
According to the official NBS manufacturing PMI which was released on Sunday, sentiment
dropped further in September, despite what has been a mild upward seasonal bias in recent
years. All sub-indexes showed weaker growth momentum. The Caixin Manufacturing PMI also
declined in September, reflecting the nation’s economic slowdown and fallout from the trade
war with the U.S. The NBS non-manufacturing PMI was stronger, however, due entirely to
a surge in the construction PMI. China’s NBS Manufacturing PMI fell to 50.8
in September, from 51.3 in August and was the first September drop since the NBS manufacturing
PMI series was released. In addition, in looking at the components,
all the major sub-indexes showed weaker growth momentum in September
IHS Markit APAC chief economist Rajiv Biswas stated
“The further slowdown in China’s official manufacturing PMI in September reflects the
intensifying impact of the U.S.-China trade war on China’s manufacturing export sector…….The
near-term outlook for the Chinese manufacturing export sector remains weak, albeit the Chinese
government may apply some further stimulus measures to support growth.”
China’s officials have promised fiscal stimulus in the form of tax cuts and infrastructure
spending to buffer the domestic economy somewhat from the effects of the trade dispute. Analysts
also expect China’s central bank will continue increasing liquidity in the financial system
to support economic growth. It is interesting to note that China’s modest
slowdown is a sharp contrast to the sharp upturn in U.S. growth, which has helped to
explain why Chinese stocks have fallen into a bear market while the U.S. has hit record
highs, and why President Trump continues to press China on trade concessions: after all
he is confident that the US is winning the trade war.
So we can see immediately that China through its equivalence of what we in the West understand
to be QE may once again be borrowing more money and thereby reducing the value of its
currency to assist in preventing these ailing industries.
In addition and possibly ultimately, the biggest risk to China is whether the ongoing slump
in the credit impulse accelerates. Some analysts believe that the credit impulse is about to
plummet, and that China is about to unleash the biggest global recession since the financial
crisis. For your information, The credit impulse is a term coined by Michael Biggs, then an
economist at Deutsche Bank, when in 2008 he defined it as the change in new credit issued
as % of GDP. Why do we mention this? Well according to
research firm Rhodium Group LLC, there have already been least 14 corporate bond defaults
in China in 2018, a high number for a country which until recently had not seen a single
corporate bankruptcy, and a number which is set to increase as Chinese banks pull back
from lending to other firms that use the funds to buy bonds, exacerbating the pressure on
the market. Beijing’s crackdown on China’s $10 trillion
shadow banking sector, has caused strains to spread from high-yield trust products to
corporate bonds as the lack of shadow funding has choked off refinancing for weaker borrowers.
Separately, Banks’ lending to other financial firms, a common route for funds and securities
brokers to add leverage for corporate bond investments, has continued to decline since
reaching a peak at the start of 2018, and is now down to the lowest level since late
2016. So what impact does this generally have. There
are many, not least of which is their effect on the value of the Chinese Yuan and the potential
decline in its ability to continue to import the high levels of gold and silver it has
achieved in recent years. More importantly of course is the potential collapse of their
bond market and not to mention the added pressure experienced by a continuing decline in the
Italian Bond markets and even this morning India’s government announced that it would
immediately seize control of a shadow lender whose defaults have caused widespread upheaval
at mutual funds. So we are witnessing potential bank failures – and although these aren’t
directly related they do suggest a potentially systemic problem within this sector.
So on the one hand we may indeed witness a decline in demand for gold and silver by China,
but a potential crisis in the Bond Markets world wide which could cause investors to
flee to gold as a safe haven investment. Our view is that at present these are just warning
signs and that these problems, short term can be overcome, but longer term there is
little doubt in our minds that these crises will occur and accelerate and then precious
metal prices will ultimately benefit – certainly from an investor buying point of view, even
though potentially, industrial demand may be adversely affected as the world economy
enters into recessionary phase. Just for interest at the time of producing
this video gold is down just $2 at $1189 and silver is down 10 cents at $14.56. We hope you have found this video interesting
and informative and if so, please give it a thumbs up and share it on twitter. Please
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updates and offers. Disclaimer:
Illuminati Silver owners come from a background of Banking, International Wealth Management
and Economics. Having now retired from these worlds we are not qualified to give investment
advice. Therefore, this and other productions must not be deemed to be giving such advice
and merely represent the personal views of its owners.

22 thoughts on “China – Bond Collapse and Tariffs – Influence on gold and silver prices

  1. Why would it flow into GOLD and Silver. And not the powerhouse of usa stocks (Dividends), relestate, usa bonds (govt INFRASTRUCTURE) Or treasuries, even a Bank cd that pays 2% (U and me 2% dont matter but what abt the Multi millionairs). All those pay and even a usa guarente when gold pays nothing?

  2. Very , very informative, 100 thumbs up if I could. I prefer this information much more to that of the mindless cheer-leading of the premabulls.

  3. Interesting indeed !!! But please explain why there has been some recent increase of silver price despite the hawkish attitude of FED, interest rate hike and the strengthening dollar index.

  4. China celebrating Golden Week this entire week … I'm confident Gold and Silver will close in the Red at the end of this week … I could be wrong … we shall see

  5. I am still buying Gold and Silver a little bit at a time until the day of reckoning and then I will load up. Thank you for a very Excellent informative report on China and the Precious metals.  Out.

  6. China will lose a trade war BUT they buy tons of US debt. And illuminati 101 states whoever pays the piper calls the tune. Trump is confident alright. Probably one of the best poker players in the world.

  7. I see 1 thumb down vote, but I don't see a negative comment or challenge question to match, so the thumb down was pointless. Interesting video, thanks.

  8. Silver has been at a $1+ arbitrage per ounce on the SGE vs the LBMA – but the SGE only trades physical. Why do you think JP Morgan accumulates physical whilst playing paper games? That's where it's going – don't forget that the true globalists don't care where their base of power is as long as they control it – and the meta-structure of that system is way bigger than the executives of governments – so there isn't much to be gained from being "counter-pumper" and on the wrong side of safe havens.

    The idea has always been the winning trade is making sure the plebs are piling into the losing side – however you can only do that so long before the plebs start surprising you.

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