In this week’s SD Bullion Market Update, we examine chaos in alleged Chinese real estate Ponzi schemes coming undone and the incoherent nature of bearish silver and gold trading of late.

The world has never seen a nation with the size and scale of China grow so fast. 

Of course, years of ghost city scandals and malinvestment projects both built and blown up in short order to clear space for new projects is commonplace.

But now, some alleged real estate Ponzi schemes are starting to hit ordinary people's life savings, and tens of thousands want their money back.

Once the country's second-largest real estate developer, Chinese property development giant Evergrande, is drowning in debt and likely defaults on what it owes.

Some 1.5 million people have put deposits on new homes that have yet to be built.

Reportedly over 70,000 retail investors forked over vast sums of money, in some cases their entire life savings, after the country's second-largest, 'too big to fail' property developer wooed them with promises of 10%+ annual returns.

After accumulating an equivalent value of about $410 billion fiats Fed notes in liabilities, the company Evergrande - which became the country's largest high-yield dollar bond issuer (16% of all outstanding notes) - sparked protests across the country earlier this week after announcing they were forced to delay payments in their wealth management products.

Evergrande allegedly has more than 700 real estate projects across 223 Chinese cities - most of which lie in the country's less developed regions - and has committed to complete some 1.4 million properties by the end of June, according to The Straits Times. 

Beijing has yet to make an official statement on what actions will be taken as many unsecured investors, both domestic and foreign, are hoping for a full-on government bailout.

According to Wolf Richter of WolfStreet.com, "Property development has been a huge factor in China’s economic growth and supposed miracle story. It accounts for 28% of GDP. And much of it has been funded by debt, including fiat dollar-denominated debt, and much of it is now blowing up in their faces.

So will the collapse of overleveraged Chinese property developers cause a financial crisis in China and perhaps beyond?

It could. But some of the biggest losers are foreign investors that bought those bonds, and not Chinese banks, and for a financial crisis to happen, it would have to sink China’s banking system."

For now, according to Wolf Richter, it looks like China might be trying to force "a brutal deleveraging on the property sector to bring down risks and tamp down on rampant speculation and price increases. It looks like an effort to rebalance the economy away from property development.

It looks like investors are invited to eat the costs of this forced deleveraging, with the government perhaps teaching them a lesson, namely that they might not get bailed out and that the flood of liquidity into the property sector was misguided and needs to end.

And it looks like the government is willing to take the risks of spillover effects into the broader economy and credit markets. And if, in fact, the government refuses to bail out bondholders, and allows a large-scale bloodbath among investors, particularly foreign investors, to occur in order to deleverage the economy, that would be a sea change for investors in China."

In the coming weeks and months, we will likely see the Chinese financial authorities’ direction.

Again those 4 GSIB bank names (see page 3) we highlighted in this week’s video, as defined by the Bank for International Settlement Financial Stability Board. Those are the Chinese megabank names to stay focused on in terms of potential contagion going possibly beyond China’s borders.

Silver and gold spot prices have been trading like trash of late.

Maybe's now nearly time to buy high-grade gold jewelry instead of plowing all your family's wealth into some pie sky, ghost city malinvestment project htt