According to Reuters Chinese banks are concerned about the increase in bankruptcies and jewelry manufacturers are reviewing their loans in physical gold industry. Only the four largest Chinese banks have, according to the same source, to 69,630 million dollars borrowed in physical gold to the Chinese jewelry industry.
Moreover, Koos Jansen explains that the composition in the balance of these four banks of precious metals not only corresponds gold loans, but all the positions of the four banks for all precious metals and therefore the assumption is totally fictica Reuters as analysts anyone but the banks themselves know the structure of distribution of these 69,630 million in precious metals.
According to Koos Jansen, a minor part must correspond to gold loans and speculates that a imapgo chain jewelry manufacturers would not reduce the demand for physical gold in China
The Bank of China, the fourth largest lender in China by assets, have already had a default by a credit in physical gold. For now, the number of defaults is a small percentage of total loans in physical gold, but according to Reuters Chinese banks have taken steps to prevent more defaults.
Physical gold loans have increased these years by restricting China cheap credit in encouraging companies to seek alternative financing. Demand for physical gold loans has been increasing because they are relatively cheap, according to Shu Jiang, chief analyst at Shandong Gold Group.
Physical gold loans are used by jewelry manufacturers who resell its finished products. Some analysts say that some manufacturers have utlizado low rates of physical gold to provide fiat money in yuan, pocketing the difference in interest rates.