Last week, the China Banking Regulatory Commission (CBRC) announced a crackdown on wealth management products (WMPs).
In a note today, David Lutz of Stifel Nicolaus writes that the selloff in commodities is because of a surge in the dollar, and in part because of this ruling to "remove leverage in the investment system."
Commodities "have been crushed" since the ruling he writes.
WMPs which are part of China's shadow banking sector had surged to 13 trillion yuan ($2.1 trillion) at the end of 2012, up 50 percent year-over-year. Even as traditional bank lending in China is slowing, non-bank lending has been picking up.
A lot of this non-bank lending is channeled towards the construction and property sector and also towards small and medium businesses (SMEs).
"Bottom line, it takes more leverage out of the system," David Lutz told Business Insider in an email. "It could even become destabilizing, if many projects were based on shadow financing, and the withdraw of those funds limits credit."
For commodities like gold however, he points to a bunch of other reasons including low inflation, concerns over gold demand in India, renewed optimism about the U.S. recovery, and ETF outflows, among other factors.
Business Insider's Matthew Boesler put together this chart that shows what a brutal first quarter commodities have had:
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