China "Gold Mania" on Property Bust

Western investors ignore this transformation at their peril. The bursting of China's real estate bubble has huge implications for the global monetary system.

Most areas of China feature a glut of property. Speculators were the driving force behind demand. Now they're watching the smart money sell, and they'll flee the market as prices gain downside momentum.

Momentum works on the downside, too – only two or three times faster. Like the crazy software stocks that fell 50% from March to May, empty Chinese properties, yielding no rental income, could fall very rapidly.

The smart money is already bailing out; a high-profile Chinese tycoon just compared China's property market to the Titanic.

"I think China's property market is like the Titanic and it will soon hit an iceberg in front of it," said Pan Shiyi at a financial forum last Friday. "After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector."

China "Gold Mania" on Property Bust