China Finds $15 Billion of Loans Backed by Fake Gold Trades

TheStreetJune 26, 2014

China says that since 2012 more than $15 billion worth of loans were backed by falsified gold transactions. Chinese investors and traders commonly borrow against commodities - among them gold, copper, rubber, soybeans and bullion in order to then invest in high-return areas like real estate. The report from china's chief auditor found the falsified transactions started in 2012. it said that 25 Chinese processors of Bullion made about $145 million from the loans. The report also showed problems with the country's coal, corn and cotton reserves. The World Gold Council estimates that up to 1,000 tons of gold may be tied up in financing deals. The question now is whether an investigation will lead to new restrictions on commodity financing. TheStreet's Julie Cerullo reports from Wall Street.