Lenders to the Nasdaq-listed jewellery maker reportedly have discovered that 83 tons of gold used to borrow billions appear to be copper alloy bars
Recommendation: Strong Sell
U.S. Securities and Exchange Commission is due on Thursday to start hearings on the risks of investing in Chinese companies listed on U.S. exchanges. It will have more material to discuss after the implosion of yet another such stock.
Nasdaq-listed and Wuhan-based Kingold Jewelry (KGJI) used 83 tons of gold bars as collateral to secure the equivalent of US$2.8 billion in loans from more than a dozen Chinese financial institutions. Or did it?
Those gold bars instead are copper with a nice coating of gold leaf, according to a cover story in China’s pre-eminent business publication, Caixin. The banks and trusts allegedly made this nasty discovery after Kingold defaulted on debts in late 2019, causing one of its lenders, Dongguan Trust Co., to try to sell the gold.
Cu, not Au.
Kingold’s chief financial officer, Bin Liu, works out of a Manhattan office on 8th Avenue. The company fashions 24 karat jewelry. Its purchasers may want to check the quality of their baubles. Copper is a lot less dense than gold, and their expensive purchases may be feeling a little light.
Kingold Jewelry Inc designs and manufactures 24-karat gold jewelry and Chinese ornaments.
The Company develops, promotes and sells a range of products to the jewelry market across the People’s Republic of China (PRC).
The Company offers a range of in-house designed products, including, but not limited to, gold necklaces, rings, earrings, bracelets and pendants.
The Company also sells investment gold products through banks in China.
The Company sells its products directly to distributors, retailers and other wholesalers, who then sell its products to consumers through retail counters located in both department stores and other traditional stand-alone jewellery stores.
Shayne Heffernan Trade Idea
We suggest selling Kingold and any China Insurance stocks you may own.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1.06.
The projected upper bound is: 0.72.
The projected lower bound is: 0.25.
The projected closing price is: 0.49.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 18 white candles and 30 black candles for a net of 12 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 7.6551. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 11 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 26.16. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 16 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -138.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
KINGOLD JEWLRY closed up 0.018 at 0.498. Volume was 357% above average (trending) and Bollinger Bands were 169% wider than normal.
Open High Low Close Volume 0.480 0.530 0.430 0.498 755,135
Technical Outlook Short Term: Oversold Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 0.87 1.02 1.64 Volatility: 206 152 130 Volume: 493,645 250,348 96,164
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
KINGOLD JEWLRY is currently 69.6% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term.
Our volume indicators reflect moderate flows of volume out of KGJI.O (mildly bearish). Our trend forecasting oscillators are currently bearish on KGJI.O and have had this outlook for the last 3 periods. Our momentum oscillator is currently indicating that KGJI.O is currently in an oversold condition.
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