Gold demand from China "insatiable" as Western firms scramble to serve buyers - Wealth Managers

Top refiner MKS in overdrive as Brink's expands vault space in Singapore 

Reuters market analyst Clyde Russell has come out with skeptical take on gold's strong 2014 performance so far. "Gold's positive start to the year seems to be based more on hope than any real change to the factors that saw the precious metal shed 28% last year," he wrote. "The optimistic view for gold is that top buyer China will continue to buy record amounts. ... At best, gold demand in China will hold up, but it's unlikely that it will accelerate by much this year."

But tune into Reuters' rival Bloomberg, and you get a completely different picture of Asian gold demand. Following on the heels of its report on global coin mints working overtime, the Jan. 28 article "Gold flows East as bar recast for Chinese defying slump" focuses on that giant gold-sucking sound coming out of China:

"Gold's biggest slump in three decades has been a boon forMKS (Switzerland) SA's PAMP refinery near the Italian border in Castel San Pietro, whose bullion sales to China surged to a record as demand rose for coins, bars and jewelry.

"As prices plunged 28% in 2013, investors dumped a record 869.1 metric tons from gold-backed funds traded mostly in the U.S. and Europe. Much of that metal is ending up in Asia, where companies such as The Brink's Co., UBS AG andDeutsche Bank AG are opening new vaults. China's expanding wealth has made the country the world's largest buyer, surpassing India, as imports reached an all-time high."

Calling China's demand "insatiable," PAMP exec Mehdi Barkhordar noted: "The demand in China is off its peak, but still respectable," he said last week. The refinery is adding shifts to keep up with demand.

Meanwhile, "Brink's, the largest provider of precious-metals logistics and storage, is adding room on top of a vault the company opened in 2012 at the Singapore Freeport building next to Changi International Airport." The firm also is opening its fifth vault in Singapore by March, as well as expanding in Hong Kong and mainland China.

"We need additional capacity, so we have to take further space," said Baskaran Narayanan, Brink's point person in Singapore. "There's a surge in demand for precious metals in Asia, and one can see the focus and movement from the west to the east."

A slew of Western investment banks in storage firms either have opened or are opening vaults in Singapore, Shanghai, and other Asian gold hot spots, including Deutsche Bank,UBS, and Malca-Amit Global Ltd.

Does this sound like cooling Chinese gold demand to you? And even if Chinese gold demand this year falls short of 2013's record levels, it's unlikely to drop off by too much. These major firms' long-term infrastructural investments are betting big on continuing, long-term gold consumption in the increasingly wealthy Asian-Pacific region.

More information can be found online at http://www.goldbullionadvisors.com