PGJ - China's Economy And Real Estate Market Have Yet To Bottom

• If China were serious about preventing a downturn and continuing the credit buildup, they would be bailing out the property developers right now. We are not seeing that.
• Instead, I think they opt to hard-land and inject new RMB into the banking system. As the Fed tightens and PBOC eases, capital outflows from China will likely increase.
• The yuan will likely depreciate as a result of narrower China-UST bond yield premiums. This worsens the USD-denominated, offshore China corporate debt problem.
• China's explosive growth since around 2000, which has significantly downshifted recently, has been a major driver in commodity demand and global inflation expectations.
• Gold has been a beneficiary of China's economic build-out and credit expansion as higher inflation expectations and increased demand for metals as a sector are good for gold prices.

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