What is China doing this for? Not necessarily a bad idea, but puzzling
China’s largest banks, led by ICBC, are shutting down retail paper and leveraged gold trading on the Shanghai Gold Exchange after July 24, 2026. Physical gold ownership is untouched, only speculative paper trading is being cut off.
This makes perfect sense to me!
China wants to build up its national gold reserve. Naturally, they want to pay a reasonable price, not a bubble price.
What inflates a bubble? Leveraged speculators.
When you have a population of 1.25 billion who can’t trust their banks, have lost big-time on real estate and need a way to save…that’s a lot of pressure on gold buying in a culture that has respected gold for thousands of years.
I’m surprised they are letting individuals hold physical gold. Not very commie of them, is it? I would have expected them to ban all private gold, like President Franklin D. Roosevelt did in 1933.
But to ban leveraged speculation makes perfect sense and is a middle ground, not extreme at all.
Wendy
Almost all.
FDR’s order allowed citizens to keep “gold coins having a recognized special value to collectors of rare and unusual coins”. Additionally, the order exempted up to $100 in face-value of standard gold coins per person (about 5 troy ounces) and gold used in professional or industrial arts.
AW, nitpicking since 1918. 
It could be that China is worried about excessive derivative gold being created and then the real stuff being demanded based on those derivatives and suddenly there isn’t enough of it to deliver (and of course prices shoot up). But potentially some peope get stiffed because the counterparty simply doesn’t have the physical gold and can’t get hold of it as they go bankrupt.
Did something in the war change you?
DB2
We tell ourselves that. The gold bugs wish it was true. China hold some gold. The Chinese public holds some gold. But the US government holds far more.
I was going to discuss this. Driving home from Boston this afternoon it was my next topic. Not the gold, but deflation. China is trying to create inflation. Gold buying is a lack of consumption.
Trump is playing with tariffs again for early next year, if I heard correctly. We are trying to keep the inflation. Deflation is far worse. It is like W’s housing bubble to ward off an economic collapse. Trump is now talking more tariffs. The tariffs are about to expire.
Warsh was brought in for counter cyclical economics. You do not want cyclical economics.
Two AI results:
Yes, China has been struggling with a prolonged deflationary cycle characterized by weak domestic demand, a severe housing slump, and widespread factory overcapacity.
In a deep deflationary environment, the public generally increases its demand for gold not as a growth asset, but as a safe-haven hedge against systemic financial failure and counterparty risk. Because physical gold carries no default risk, it is often viewed as the ultimate store of value when confidence in banks and paper currency evaporates