by Dan Popescu, Gold Broker:
Thanks to a set of excellent charts on gold imports vs exports by Nick Laird (www.sharelynx.com), I would like to give you a brief outlook of where is gold going. We heard for some time that gold is moving to the Far East but is it really only moving there? Well if we start with the US, it certainly is going out. In the first chart, we can observe that at least since 1996 gold has been leaving the US without exception. Even at the top of the gold market when the price crossed briefly $1,900 gold exports exceeded gold imports for the US. However, according to Nick Laird, for the US if you add up their gold mine production it puts them in a net neutral position. So their imports plus production equals their exports; this over the last 18 years.
Chart #1: US Gold Imports minus Exports
Is this the same case for Europe? Contrary to what you might think gold is moving from West to East but some is not going all the way to India and China but rather stops in Europe. I have always made a distinction between North America (US and Canada) and Europe. In the second chart below, we see that European central banks have stopped selling gold in 2008 which corresponds with the financial crisis that almost brought down the international financial system. What is interesting is that they have not restarted buying although we have heard during the last year several European central banks talking up gold and in the last quarter, the central bank of Italy published a very positive study on the value of gold as a reserve asset. Last year Mario Draghi, president of the European Central Bank, at a question asked about gold, without hesitation, replied “For central banks this [gold] is a reserve of safety, it’s viewed by the country as such. In the case of non-dollar countries it gives you a value-protection against fluctuations against the dollar.” Can we expect a change in attitude by the ECB towards gold and the beginning of buying? I wouldn’t be surprised.
Chart #2: European central bank agreement on gold selling
The next chart shows clearly that Europe has been importing more gold than it exported since the low in the gold price in 1999. The lowest dollar gold price was the afternoon London fix on July 20, 1999 when gold was fixed at $252.80. Exports started to exceed imports only in 2013 and they have been decreasing since then. I expect imports to be higher than exports again in 1016 in Europe.
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