China’s ‘Missing Commodity’ Scandal: Fallout Spreads As Banks Get Involved

–  More On China’s “Missing Commodity” Scandal: Fallout Spreads As Banks Get Involved (ZeroHedge, June 5, 2014):

While we have warned about the problem with near-infinitely rehypothecated physical/funding commodities/metals, be they gold or copper, many times in the past, and most recently here, it was only yesterday that China finally admitted it has a major problem involving not just the commodities participating in funding deals – in this case copper and aluminum – but specifically their infinite rehypothecation, which usually results in the actual underlying metal mysteriously “disappearing”, as in it never was there to begin with.

And disappearing commodities is exactly what we reported yesterday the third largest Chinese port of Qingdao is being investigated for after a source at a local warehouse said that “it appears there is a discrepancy in metal that should be there and metal that is actually there… We hear the discrepancy is 80,000 tonnes of aluminium and 20,000 tonnes of copper, but we hear that the volumes will actually be higher. It’s either missing or it was never there – there have been triple issuing of documentation.

This has resulted in a prompt and acute selloff of copper and other commodities as we further documents, but the problems may only now be starting and the banks, those which stand to lose the most if their “collateral” is uncovered to have never existed, are finally getting involved. As Reuters reports, worries over a probe into commodity stockpile financing at China’s Qingdao port appeared to deepen on Wednesday as Standard Bank Group and a part-owned unit of Louis Dreyfus Corp warned of potential losses and copper prices fell further.”


2 thoughts on “China’s ‘Missing Commodity’ Scandal: Fallout Spreads As Banks Get Involved”

  1. This site has been wonderful in covering these important stories. The Chinese are the biggest liars in the world, except for the Japanese. They have claimed exports far in excess of the true records, they lie about their GDP which they base on what they build, not what they earn.
    China has all these ghost towns, the world’s biggest building, including an artificial seashore 100 miles from the ocean……but they are empty because the Chinese people cannot afford to live or do business in them. It is insane.
    China made a fatal mistake by following the worst of US markets, and printing money (and gold certificates) far in excess of what they had.
    They are being found out. Corporations have been dumping China and moving elsewhere to rape other nations……..China is filthy, and nobody wants to work there.
    10 years ago, my hiring managers had to spend a week per month in China, and they hated it then. Since that time, it has gotten much worse, and nobody will go there.
    Remember the SARS virus? China claimed to have lost 800 people? My managers were there, some of them were quarantined for 10 days because they might have been exposed. I was really angry they didn’t tell me, I was only a contractor, so didn’t matter.

    The real number of Chinese dead was in multiple thousands. One of my managers told me entire villages were wiped out, it was far in excess of their claims. Nobody with any sense can trust a word they say. For those who thought they were buying gold from China and stupid enough to accept paper…….they are screwed. They can kiss the dough goodbye, as my father would have said.


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