Are Chinese Gold Imports Really Down This Year?

Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.   - Ayn Rand

The answer is, we don’t know.  And we don’t know because we can’t know.  Reuters ran a story this morning which asserted that China’s gold imports had dropped to a 16-month low in May.  But the truth is, we don’t know what China’s total imports in May were.

We do know that the World Gold Council’s 2013 tally of China’s gold imports was egregiously inaccurate:   China To WGC:  “HUH?”   Not only that, according to the general manager of the precious metals department for the State-run Industrial & Commercial Bank of China, the ICBC  is not meeting the demand for gold by the market.  Hmm…

In fact, it’s been impossible to track China’s total gold imports since late April, when China began to allow gold imports into the mainland through Beijing:   China Opens Beijing To Gold Imports.

While Hong Kong publishes monthly reports on the amount of gold supplied to China, mainland China does not release trade data on gold.  Prior to this, we could track China’s gold imports from data reported by Hong Kong and the Shanghai Gold Exchange.

The move to make China’s gold import volume opaque is intentional:   “The bulk of gold bought by China used to flow through Hong Kong, making its export data a useful proxy for Chinese demand as Beijing treats data about imports of the precious metal as a state secret”  (LINK).

I bring this up because I’ve seen several reports and blog commentaries which suggest that China’s demand for gold is declining this year.  The conclusion is that the gold is headed for another down-leg.

Seemingly, the current action in the gold market is contradicting the premise that gold is headed lower…If I were U.S. policy-makers, I would be worried about the reasons China has decided to go “cloak and dagger” on their gold imports…

 

10 thoughts on “Are Chinese Gold Imports Really Down This Year?

  1. Dave:
    This adds to my belief that when the last straw breaks the horse’s back the prices of gold and silver will explode. For those not already “in” it will be too late.

  2. this late, u still don’t recognize the over-the-top baldfaced “gatekeepering” being spouted non-stop?

    i’m waiting on that disinfo artiste/freak TD’s prediction of a copper price collapse, based on his joke logic the fact the rehypothecated copper is maybe 10 times the actual physical stored in those giant warehouses, the ones we’ve heard non-stop hysterical screeching about these past 3 years that are overstocked to the gills, with not one proof of it.

    just hit newswires minutes ago:

    (Reuters) – Chinese gold processing firms have since 2012 used falsified gold transactions to borrow 94.4 billion yuan ($15.2 billion) from banks, the country’s chief auditor said.

    Commodities such as copper, rubber, soybeans and bullion have commonly been used in China for financing, where traders or investors borrow against the commodity with the aim of investing the money in high-return areas such as real estate or shadow banking.
    http://www.reuters.com/article/2014/06/26/us-china-gold-financing-idUSKBN0F10Q920140626

  3. Zerohedge is reporting more scam ponzu gold transactions. very murky market.
    The Phyz market is stressed and now this?

  4. Dave, if you often read Koos Jansen’s blog, you should consider donating some money. Unlike you, he relies on donations

  5. It’s possible that Chinese physical gold imports dropped this year because they cannot source enough physical supply. Supply constraints are bullish for price. Swiss refiners are running 24/7/365 and they cannot produce enough metal to send to China to meet demand.

    1. No because that would drive the price higher. China is taking a portion of its gold imports “underground.” The west can’t monitor gold that goes into China in ports other than Hong Kong or is withdrawn from the Shanghai Gold Exchange. That has always been the case – gold going into China that the Govt/PBoC buys and does not get reported, but opening Beijing opens up a much bigger import “pipeline.

      I’ll leave it to you to decide why.

      I posted your interview in the “Galt’s Gulch” section of my navigative bar at the top.

  6. economics 101 would tell you that….IF chinese demand was a strong as you deduce in the past year…it makes the lousy and/or subdued price action of the past 18 months even scarier.

    gold caught up to other asset classes the first decade of this century. it’s fairly valued now.

    OH…and our $17 trillion dollar debt? accounting 101 would tell you that debt is only one side of the balance sheet. recent studies put our country’s assets at over $40 trillion. does that make us heroes? no. with unfunded mandates, we still have a problem — but it’s not doomsday.

    1. Funny your “scary” claim that Chinese demand should directly impact POG has no real world corollary.
      How does this lead on to your “gold is fairly valued” compared to other asset classes and US debt is miniscule or manageable “not a problem”?
      The “too big to fail”/TBTF/too big to jail oligarchical banking and insurance lobbies, special interest groups and political action commitees receive the free lunch stimulus, bailouts, tax exemptions, subsidies, zero interest rates, QE, TARP at taxpayer expense and from dollar holders subject to inflation.
      While the luxury goods and financial, discretionary markets have enjoyed a free ride to bubbleland, others have taken the free end of a long chain.
      Aside from your understated US debt numbers including unfunded liabilities and off-books budget, private debt and money supply also impacts the dollar.
      The inflation-adjusted POG is thousands of dollars higher than the Comex spot price, just using the revised, adulterated inflation number currently “official”. The actual inflation number Shadowstats and others publish supports a greater price rediscovery.
      Lastly, the epic unregulated, misallocated free lunch/free ride of financialization and monetization includes over a quadrillion in derivatives, and other money substitutes bloating the money supply with toxic credit cards, loans, “aid” and municipal bonds etc.

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