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…