The Phaserl


China’s gold demand

by Alasdair Macleod, Finance and Economics:

The China Gold Association this week released estimates for China’s “gold consumption” for 2013 at 1,176 tonnes. Furthermore the CGA reported China’s own gold production at 428 tonnes.

The CGA’s figures were significantly less than recorded imports into China from Hong Kong. Instead, on my analysis, the CGA figures do not represent total demand, but presumably only that portion reported to it by its members at the retail level. The purpose of this article is to set the record straight.

There are very few figures coming out of China that you can rely upon, and this is particularly true of gold imports. Instead, you have to take what is available and apply a judicious mix of logic and deduction. Mainland China does not publish imports and exports. The only figures for gold supplied to the Chinese public are of gold delivered through the Shanghai Gold Exchange and out of their registered vaults, which for 2013 totalled 2,197 tonnes. Most of this I have reason to believe is imported, only some of which is through Hong Kong. And to think that gold is only imported through Hong Kong is a mistake.

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1 comment to China’s gold demand

  • Ed_B

    “Furthermore, ultra-rich Chinese can buy gold outside China and there is no way this additional demand can be estimated. Nor can we estimate any gold bought in London and elsewhere by the Chinese government.”

    Indeed. Wealthy Chinese traveling to places like Dubai can easily buy quite a lot of gold in various forms from the gold dealers in the local bazaars.

    I would be VERY surprised if there were not hundreds, if not thousands, of people around the world of many nationalities serving as gold procurement agents for China. They would buy gold in their name, take delivery, and then ship it on to a receiving agent in Hong Kong, Singapore, or China itself. I would also be surprised if China does not have at least 10,000 tons of gold at this very moment. At a guess, I would say that they are looking for at least 20,000 tons of gold. At the rate they are buying gold, this goal is coming up fast. This would enable them to back their currency with gold, making it MUCH stronger in international trade.

    One other point is that the price of gold has long bet set in London with “help” from NY. This is the way that it has been but this will change once China backs their currency with gold. The price of anything is set by those who have it and the Western vaults are being drained of gold while the Eastern vaults are being filled with it. There will come a time when the SGE sets the price of gold, not London. When that time comes, we will see MUCH higher gold prices because the East values gold much more highly than does the West. All commodities flow from where they are valued least to where they are valued most.

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