The market is now “driven by Asia,” notes BlackRock fund manager
Koos Jansen of the In Gold We Trust blog and Bullion Star has long contested the so-called “official” statistics on China’s gold consumption, and now he’s pointing to a bombshell speech from the head of the China Gold Association that confirms his argument.
Jansen says that import/export figures tracking gold shipments between mainland China and Hong Kong are inadequate because they don’t reveal the true demand picture. Likewise, he disagrees with the World Gold Council’s data on Chinese purchases, saying its estimates of about 1,000 tons are grossly lowballed. Jansen cites the Shanghai Gold Exchange as the best gauge of Chinese demand.
Demand pegged at 2,000 tons: In a new blog post, Jansen says a speech from a top Chinese gold industry player, now available in an English translation, confirm his estimates of much-higher gold demand.
“This is the final blow for the ones who still couldn’t comprehend, after all evidence presented, the amount of Chinese non-government gold demand in 2013,” Jansen wrote. “At the LBMA forum in Singapore June 25, 2014, one of the keynote speakers was chairman of the Shanghai Gold Exchange (SGE) Xu Luode. In his speech he made a few very candid statements about Chinese consumer gold demand that according to Xu reached 2,000 tonnes in 2013. In contrast to the Word Gold Council (WGC) that states Chinese gold demand was 1,066 tonnes in 2013. Xu's speech has now finally been translated and published in the LBMA magazine The Alchemist #75.”
“Data on China’s gold imports has not previously been made available to the public,” Xu said. “However, gold has historically been imported through Hong Kong, and Hong Kong is highly transparent, disclosing details such as the number of tonnes of gold imported on a monthly basis.Last year, China imported 1,540 tonnes of gold. Such imports, together with the 430 tonnes of gold we produced ourselves, means that we have, in effect, supplied approximately 2,000 tonnes of gold last year.”
Media are dropping the ball: Jansen concludes: “There still hasn't been a single mainstream news outlet that has covered the immense discrepancy between the Chinese demand numbers from the WGC and the SGE. I would like to express my deepest concern about how the mainstream media is covering the (Chinese) gold market. Xu stated, at the most prominent precious metals forum in the world, Chinese gold demand reached 2,000 tonnes. How could the press have missed this?”
But look out: Asia’s ability to import gold – as well as its role in setting prices -- will only grow stronger now that China, Hong Kong, and Singapore are launching new influential gold contracts. Even The Wall Street Journal had to acknowledge the issue.
“Asians buy most of the world’s gold, but nearly all of it trades in London,” it reported. "Now, with Western investors souring on the metal, the region is making a bid for some of the action. Three big financial hubs in Asia are separately launching trading in a gold contract, each backed with physical gold. If they draw enough investors, the contracts could influence the price of gold, which is set by a daily fix in London.”
“You now have a market that’s driven by Asia,” BlackRock fund manager Catherine Raw told the paper.
“Enormous” gold demand: Combine this news with a recent statement from bestselling author and investment strategist Jim Rickards, and you have a frightening picture of Chinese gold demand.
China is “bringing gold in through Central Asia using People’s Liberation Army assets – armored columns, basically – off the books, mining outputs, Hong Kong imports,” he said. “China has acquired 3,000 to 4,000 tons in the last five years. That’s almost 10% of all the official gold in the world. These are enormous acquisitions.”
There’s a giant sucking sound coming from Asia, and it’s the sound of China – along with India, Singapore, and other nations – lapping up Western gold. The potential implications for the gold price – not to mention the U.S. dollar – are huge. Therefore, the time to acquire your own store of physical gold is now.
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