BubbleChina’s credit bubble is on the edge.
China’s rich have an estimated equivalent of $3 trillion in personal assets to protect from a credit and currency maelstrom. Inevitably this will lead to huge shifts in asset allocation, and gold bullion is likely to be the outstanding beneficiary.  In common with all other Asians the Chinese regard gold as true money, a safe-haven from government currency.  And only five per cent of $3 trillion at current prices is 68,000 tonnes of gold, which gives an idea of how dramatic the effect of even a small flight to gold would have on the price.
This is likely to catch Western capital markets on the hop, given the common misconception that gold is little more than a demonetarised commodity. With a credit crisis appearing to be developing in China, this view could face its ultimate test at a time when the West is systemically short of physical gold and silver, and its institutions even short of paper gold as well.
Today’s troubles over Ukraine can come and go, but for gold, China is the bigger story by far. So much so, that this could turn out to be a very bad time to own claims on gold instead of physical gold itself.