The emerging markets crisis has died down recently and we are resuming a normal bull market. That is bearish for gold. But when the emerging markets crisis heats up again due to the Chinese slowdown, a flight to safety will occur again.
The big headline in EM is China. The Chinese credit crisis has become messy as bad loan writedowns soar at Chinese banks. The FT reports that:
The five biggest Chinese banks, which account for more than half of all loans in the country, removed Rmb59bn ($9.5bn) from their books in debts that could not be collected, according to their 2013 results. That was up 127 per cent from 2012, and the highest since the banks were rescued from insolvency, recapitalised and publicly listed over the past decade.
And we can see the slowdown in real economy data. The...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.