Is SHIBOR Indicating a Chinese Banking System Collapse in November?

SHIBORIs Peking panicking again?
Do you recall the June panic in the Chinese banking sector? Rumor of defaults of a secondary bank resulted in the SHIBOR, equivalent of LIBOR for China, spiking abruptly. In the span of a few hours, a “Credit Freeze” developed. The Chinese government has forbid the media to write more on the subject and then, opened credit lines to avoid defaults wherever it was needed, saving banks, industries and speculators.

On the 4th of June,  Wei Yao, the SG Cross assets Research’s China economist wrote that China may be on the verge of a “Minsky moment.”
A few days later, Beijing panicked, the SSE crashed and it seems that many speculators were forced to close their contracts on commodities (soybean mealsoybeansoybean oil, ) bringing to a real disruption of these markets. Gold and Silver also suffered, both bottomed at the end of June.
If the sudden spike in the SHIBOR is any indication, it seems that the Chinese banking sector fears the second part of November.Trivium 5 oz 2

 

Submitted by Cyrille JubertOvernight SHIBOR

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One week SHIBOR:SHIBOR1w

If you lend for short term, the problem will rise again a short while further at due date. It seems that tension is climbing again in China.
Two weeks SHIBOR
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One month SHIBOR
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In an interview on Bloomberg, may the 29th, Charlene Chu, senior director at Fitch Ratings, stated:
“Total lending from banks and other financial institutions in China was 198 percent of gross domestic product last year, compared with 125 percent four years earlier” …. A jump in the ratio of credit to GDP preceded banking crises in Japan, where the measure surged 45 percentage points from 1985 to 1990, and South Korea, where it gained 47 percentage points from 1994 to 1998, Fitch said in July 2011. In China, it has increased 73 percentage points in four years, according to Fitch’s estimates. “You just don’t see that magnitude of increase” in the ratio of credit to GDP, Chu said. “It’s usually one of the most reliable predictors for a financial crisis.”…“Companies are taking on a lot of debt but not getting comparable returns,” Chu said. “If they’re not getting sufficient returns, at some point they will have problems repaying the debt.” 

On the 4th of June,  Wei Yao, the SG Cross assets Research’s China economist  wrote that China may be on the verge of a “Minsky moment.” Wikipedia defines a “minsky moment” as a sudden major collapse in assets value…

Sunshine_Mint_Bars

A few days later, Beijing panicked, the SSE crashed and it seems that many speculators were forced to close their contracts on commodities (soybean mealsoybeansoybean oil, ) bringing to a real disruption of these markets. Gold and Silver also suffered, both bottomed at the end of June.

Looking at the SHIBOR, it seems that the Chinese banking sector fears the second part of November.
What will happen this time with gold and silver prices?
Cyrille Jubert is a French journalist specialized  in precious metals, and author of  ”Silver Throughout History“.  From ancient times to the actual Crimex, the author followed the scent of silver, giving a very different version of Official History. He will convince you that silver will be re-monetized with the  monetary reform to come …  very very soon.