China May Be Importing A Lot More Gold Than Is Reported

Here’s an interesting little factoid:   In 2013 the U.S. mined a total of 210 tonnes of gold.  YTD thru March 2014, the U.S. has exported 158 tonnes of gold.  In that is likely that gold production was at best flat to 2013 in Q1 (and likely down), where is all this gold coming from that the U.S. is selling and shipping to the rest of the world, primarily China?

There has been a lot of gold market media coverage this year focused in on China’s demand for gold.  The consensus misconception is that China YTD has bought less gold this year than last.   As is commonly and tragically the case, most of the mainstream – and even precious metals-dedicated – news reports are using bad data sources for their reports.   Unfortunately, China has made it intentionally impossible to figure out with any degree of reliability just how much gold the country as a whole is accumulating.

I wrote an article for Seeking Alpha discussing this issue:

[There are] several reasons why generally published and accepted western reports of China’s gold import activity are unreliable and that China’s true level of gold demand is significantly higher than is commonly accepted or known outside of China.

You can read the full article here:   China’s Gold Demand

Anectodally, the SRSrocco Report (SRSroccoreport.com) wrote a nice piece showing that nearly 50% of U.S. gold exports went to Honk Kong (click on chart to enlarge, edits are mine):

Untitled

82% of all U.S. gold exported went to Hong Kong and Switzerland.  This information is relevant to China’s gold demand because it’s safe to assume that most of the gold Hong Kong receives is sent to China.  Furthermore, a large portion of the 51 tonnes of U.S. gold that went to Switzerland ends up going to China via Hong Kong.  (FYI, Steve/SRSrocco does great work on his site).

In other words, it’s very safe to assume that close to 80% of all of the gold sold by the U.S. to the rest of the world ends up in China.

Foretold is forewarned:   He who controls gold makes the rules.  That adage has withstood the test of several thousand years of history.  The U.S. fiat currency experiment is a mere infected pimple on the giant corpus of history.

You can capture a lot of upside that is coming in gold by owning good quality junior mining stocks.  I have four great ideas in my research section:   Junior Mining Stock Research.

4 thoughts on “China May Be Importing A Lot More Gold Than Is Reported

  1. “China May Be Importing A Lot More Gold Than Is Reported”

    May-be-importing-a-lot-more-gold-than-is-reported?

    Thanks for the chuckle, Dave, I got a kick out of that one.

    Even if China’s import numbers are 100% accurate, no one knows how much gets smuggled into China. Heck, no one knows how much gold gets smuggled into India yearly let alone China.

    Here is another gold nugget to consider-China imports copper ore, copper ore sometimes contains gold. While the amount of gold in the copper ore is unknown, it is still a supply of gold to add to China’s appetite for the yellow metal.

    I suspect, and this is just me guessing, China is keeping tight lipped about how much gold they are buying so they don’t spook the market and cause gold to spike and their dollar holdings value to fall. Once China has more than enough gold or has swapped much of its dollar/Treasuries for gold, well that is a different story.

  2. China will let the world know when they and only they are good and ready. Be careful what we wish for, whether it’s 5’000 tons or 8’000 as some who follow this closely suspect, it’s not going to be good news for the U.S. monetary system. Does anyone remember the movie “My cousin vinnie?” Joe pesci asks the guy,”Are we to believe the laws of physics cease to exist on your stove?” So uhh… are the Fed and central bankers asking us to believe the laws of economics cease to exist within our countries borders?

  3. US employers added robust 288k jobs in June

    US economy added robust 288k jobs in June, 5th straight big gain; jobless rate dips to 6.1 pct

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.