China Becomes World’s Larest Gold Buyer - Buys 93.5 Tonnes Of Gold Coins / Bars in Q1 - Gold Ownership Rising From Miniscule Levels

Tyler Durden's picture

From GoldCore

China Becomes World’s Larest Gold Buyer - Buys 93.5 Tonnes of Gold Coins / Bars in Q1 - Gold Ownership Rising From Miniscule Levels

Gold and silver are higher again today with the debt laden dollar, euro and yen all being sold. News that China has become the world’s largest buyer of gold bullion and has seen investment demand double continues to reverberate in the markets and may have contributed to this morning’s strength.

Both gold and silver are marginally higher for the week and after last week’s gain appear to have regained their poise and are consolidating after the recent sell off.

Gold Investment Demand in China
Courtesy of the Wall Street Journal

China becoming the world’s largest gold buying nation is very important. While informed analysts have been saying that this would inevitably happen much of the commentary and most of the public remain completely unaware of the huge implications that Chinese gold demand has for the gold market. 

Indeed, there continues to be a huge level of ignorance regarding the scale and sustainability of China’s, but also India’s and other large and increasingly wealthy Asian countries, demand for gold and silver bullion. 

Chinese investors bought 93.5 tonnes of gold coins and bars in the first quarter. China produced 340 metric tons of gold last year and consumption was about 700 tonnes, leaving a gap of nearly 360 tonnes.

Demand is forecast to increase due to the growing wealth of the Chinese middle class and deepening inflation in China.

What is most important and rarely covered is the fact that gold ownership by the Chinese public remains minuscule. Especially when compared to other Asian countries such as Vietnam and India.

Gold ownership is rising from a very, very low base which means that the investment demand and demand for an inflation hedge from 1.3 billion increasingly wealthy Chinese people is more than sustainable.

The not realized important fact that the people of China were banned from owning gold bullion from 1950 to 2003, means that the per capita consumption of over 1.3 billion people is rising from a tiny base.

Cross Currency Rates (Including Gold and Silver)

While the recent increase in Chinese demand has been very significant, it is likely to continue and the demand is sustainable due to Chairman’s Mao’s half-century gold ownership ban.
Should the Chinese economy crash as some predict, demand could fall. However, sharp declines in Chinese equity and property markets and a depreciation of the yuan would likely lead to significant safe haven demand for gold.

Indeed, should high inflation continue in the Chinese economy or should higher inflation or even stagflation occur than Chinese demand could even increase.
Chinese demand alone likely puts a floor under the gold market at $1,450/oz.

The inflation adjusted high of $2,400/oz remains very likely given Chinese and Asian demand alone for gold bullion.
Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” major change in the fundamental supply and demand situation in the gold and silver bullion markets – particularly due to investment and central bank demand from China and the rest of an increasingly powerful and wealthy Asia.
It is worth noting that the People’s Bank of China’s gold reserves are very small when compared to those of the U.S. and indebted European nations. China appears to be quietly accumulating gold bullion reserves. As was the case previously, they will not announce their gold purchases in order to ensure they accumulate sizeable reserves at more competitive prices.

The recent bear raid on silver is being challenged by silver’s very favourable supply and demand fundamentals.

The Comex Registered Silver Bullion Inventory Data shows that silver bullion inventories are now at record lows (see chart).

Speculative paper players on the COMEX may have been successful in again manipulating prices lower but as ever the physical reality of supply and demand for the underlying commodity, asset and currency will dictate prices in the medium and long term.

Comex Silver Bullion Inventory Data/Registered


(Financial Times) --Chinese set new standard in buying gold

(Wall Street Journal) -- China Is Now Top Gold Bug

(Bloomberg) -- Gold May Gain on Europe Debt Concern, Inflation, Survey Shows

(Reuters) -- PRECIOUS-Gold regains strength on bargain hunting,silver steadies

(Bloomberg) -- Gold Advances as Europe Financial Turmoil, Dollar Weakness Spur Purchases

(Bloomberg) -- Gold Imports by China May Rise After Demand Gains to Record, Council Says

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
oh_bama's picture


Who is the STUPID "ELEPHANT"?  Who LOSES MOST of his BETS?

mrgneiss's picture

I didn't know PIMCO'S largest holding was gold; it seems to have been conveniently ignored by the media over here:

achmachat's picture

you guys realize that this is "just" the official numbers?

It makes you wonder just how much gold has been bought through backdoor operations.

edit: anybody knows where all that "Gordon Brown Gold" went?

tmosley's picture

GDL, from what I hear.  I don't know the veracity of that story, though.

falak pema's picture

I think that the chinese are digging a tunnel to Fort Knox. Only ZH now knows this thing as of today...act accordingly...the tunnel will be completed in November 2012.

falak pema's picture

"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth."

"...By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century."
-- John Maynard Keynes

Thanks SC : interesting historical quotes and material for thought!

Racer's picture

"ECB's Noyer says ECB has kept inflation expectations firmly anchored"


Excuse me? When I see all my essentials going up 30 to 50% I am very scared!

What planet is he on?

FunkyMonkeyBoy's picture

"What planet is he on?"

- He's on planet 'save ass'.

Sean7k's picture

Makes you wonder if China is bankrolling JPM and HSBC for keeping the prices down. 

The separation in paper and physical continues. 

SLV lost 7 MILLION ounces yesterday. Pretty easy if you're just moving certificates, but the real item? 

Send in the trolls, there used to be trolls...

Urban Redneck's picture

7 million ounces = 240 tons

The average armoured car has a capacity of around 10 tons (US or being generous with UK chassis specs).

So to move 7 million ounces from vault A to B would require probably 24 truck trips (one side of the LBMA vault to another would be a different issue, but there should a paper trail for 7 million ounces that can be tracked)

If not, then someone should hire some of the investigators in the booming Chinese fraud business to hang out in London and do some vault watching.

Bay of Pigs's picture

That clearly shows the extent of probable FRAUD in SLV. There is no other explanation for something like that. If there is, let's here it, because all the silver experts I follow sure as hell can't come up with anything else that explains legitimate movement of physical metal in amounts like that.

earnulf's picture

Let's do some quick math with small numbers (compared to the US Debt anyway).   China, 1.3 Billion people.  India, 1 Billion people.   Together, they account for 2.3 Billion people vs 300 million in the US. (6 to 1 ratio?).  So if the same percentage of people there decide to physically own as they do here (usually less than 1 percent), it is still 6x the demand that the US generates.   

You would think that would be positive.....if supply and demand were really in charge.

Robslob's picture

You can no longer Praise the Chinese Economy and bash Gold at the same time...

Al Gorerhythm's picture

I'm going to post a reply to Texan gunslinger, from an old post.

by Texas Gunslinger 
on Fri, 05/20/2011 - 02:45

Sorry, but that's just nonsense! 

The only reason you're paying a premium is because it's easy for the retail coin stores to jack the small, naive, easily duped, retail investor for profit.  The "pitch" of imminent currency collapse, or death by inflation, or JP Morgue, or "price doesn't matter" are fantastic sales pitches and smokescreens to jack the dumb money for profit.  Let's be honest, paranoid doomers are great customers because they're the most emotional; emotion is the salesperson's best friend. When you see a huge difference between physical and paper, it means you're getting jacked.  

Even Sprott admitted yesterday (or day before?) on that Max Keiser interview posted on ZeroHedge that he could buy all the physical he wanted at spot price.  

Paper = physical, at least in terms of price for the real players in the silver market.

First reply.:

by Al Gorerhythm 
on Fri, 05/20/2011 - 06:01

Weren't you on the other day saying that your two main mentors are your coin dealer and your hope dealer (pastor)? I thought that that was where you divided your time, unless he is one and the same person.

Can you ever make a post that is backed by researched analysis not just opinionated conjecture or assumptions? Your posts are a waste of time and argumentative jibes.

Edit: I can't recall Sprott saying that he could buy plenty of it at spot. From my take he said he had a hard time finding it. I am about to watch it again. 

Follow up:

by Al Gorerhythm 
on Fri, 05/20/2011 - 07:33

"Even Sprott admitted yesterday (or day before?) on that Max Keiser interview posted on ZeroHedge that he could buy all the physical he wanted at spot price."  

That is a huge mislead from you Tex. Your post is obviously antagonistic toward the retail investor. You claim that retail investors are being Jacked at the checkout because the nasty coin shop operator or bullion dealer is ripping investors off by charging a premium over spot spot. Can you please advise us where we can conveniently buy silver at spot?

Back to Mr. Sprott. Nowhere in that interview does he say that there are ample supplies at spot. It took him 6 weeks to get his silver and he stated elwhere that the silver was freshly poured, not a scratch on them. He was stating that his company can buy at spot. Nothing more.

Further more, he stated that he doesn't trust the numbers from the traditional (two) major suppliers of those supply figures. They are unreliable and poppycock. How can you trust numbers that show that supply meets exactly demand, year on year, down to the ounce? Silver is the only commodity on the planet that has had a ablance for years. Not one ounce over demand was mined!

Silver demand is a world wide phenomenon, encluding China and India and 2.5 million extra investors on the planet than the last bull.

Little guys don't move the market but they do save themselves from the mismanagement (if you could call it that) of fiat currencies.

This past price bust was about saving the short speculators. Micro managed to start the decline in after hours trading and then slam the price with 5 margin hikes.  

Ratio should be 16:1 using his research.

Describes using simple math that the Comex is overselling silver with paper promises to deliver. If 3% of traders demanded delivery, the Comex would default.

States clearly that there is simply not a surplus of silver.


His last statement was that new investors at the margin would exacerbate the SHORTAGE that we already have.

You either missed all of this other evidence or cherry-picked his statement that he could buy at spot and used it as the establishment of your rant (thesis).

I am not able to give you the benefit of the doubt over this as your previous post have been written in the same vein.

I call bullshit and confirm your tag of Troll.


tmosley's picture

You know, I realize that the reason Ebay prices are so high is because it is an entirely secondary market.  NO-ONE wants to part with their silver, except miners and paper holders (IFF the paper vehicle actually has silver).

TheTmfreak's picture

Other than what seems to be coin dealers, it seems most sell because "they have to." In otherwords cashing in their savings for immediate needs (an extremely reasonable action).

Al Gorerhythm's picture

That should read 2.5 billion potential investors.

Sean7k's picture

Totally unrelated, but what if all those dark Blade Runneresque stories of future society have been made to condition the population to accept a rather bleak and ugly future? Perhaps all the scify writers are really working for the Elites and conducting a massive conditioning program in collaboration with hollywood?

When was the last time you saw a movie about a successful anarcho-capitalist society that lived in freedom, peace and prosperity?

If they are lacking excitement, the changeover would provide some gore and guts. 


Alex Kintner's picture

A variation on that theme: What if the sci-fi writers are trying to expose the Elites by warning us of the future. It's funny how many Prophecies of "1984" have come true -- even as some robo-program at the NSA reads this comment.

BobPaulson's picture

A lot of Orwell's predictions were true in 1948 when he wrote it. I think he was using hyperbole to drive the point home. Perhaps he didn't even imagine it would get as bad as it is now.

BigDuke6's picture

i suspect he really didn't think he'd be so accurate so quickly.

he was essentially 15 years late - maybe less.

no one understood politicians and the predatory class like orwell.

ibjamming's picture

It's funny...up until "civil rights" took over everything...the future was always seen as being something wonderful.  Going into the 70s, the view changed to dark and forbidding. 

Are they related?  Did everyone see the hopelessness that "political correctness" and "equality at all cost" would do to society?  I do now!  We're killing ourselves JUST to give the weak an advantage.  Women shouldn't be "working"...they should be raising their children and forming neighborhood support groups.  The problem is...FORCED integration has made us all strangers in our own neighborhood.  Strangers who want nothing to do with "those people".  So, we stay inside and watch DWTS.  There's more...much more...

tmosley's picture

1984 was written in 1948.  Brave New World was 1932.

Dystopian literature has been steady.  There was no change with "civil rights".  Nice try on blaming the darkies, though.

ibjamming's picture

You may be right...but not about the darkies!  If we HAD sent them back after the Civil War...this country would be a LOT better off.  I can't stand the bastards...

topcallingtroll's picture

Yeah it would have solved a lot of problems and prevented a civil war if Madison and Jefferson had got them all shipped to Liberia.

However that was not to be our future and we have to make the best of it. We are the most diverse nation on earth. Hope it works out.

tmosley's picture

Not really.  We would have been better off if the North hadn't chosen to oppress the South during Reconstruction (or better yet, if they had just allowed them to secede).

We would not have had the hideous racism and collectivism that lead to real tragedy, like this:

falak pema's picture


My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.

—Ayn Rand, Atlas Shrugged[4]


The anti-collectivist ethic that is the basis of American conservative ideology.

What happened to the social contract in this vision?

And what happens if those who sing this song are in fact Oligarchs that don't adhere to "free markets" but to "manipulated markets", that maximize subjective 'productive achievement' at the expense of general good, as defined by all the philosophers since Plato?

Ayn Rand does not believe in the dialectics of individual vs general good. There is no trade off as far as she is concerned. So Hitler was right to seek his 'objective truth' in his vision of things à la Mein Kampf.

Atlas Shrugged is Humanity debased, so that one man can live his dream, whatever the cost. I love this quintessential narcissistic utopia. And conversely its rejection of an alternative vision as dystopia. Now that is totalitarian down to a T!


tmosley's picture

What the fuck are you even talking about?  Are you saying that those who preach the gospel of Atlas Shrugged don't follow it's principles in real life, and therefore the principles set forth in the book are bad?

What are you smoking?

Here's a hint:  the oligarchs of this world are NOT following Rand's philosophy.  They are playing the role of the VILLAINS of her book.  WE must strive to be the heroes.  It's not that hard.

Vlad Tepid's picture

Chill out, tmos.  Just do what I do and skip over everything felak petemamdnendisnai writes.  It's mostly gibberish anyway and makes the threads go down smoother.  BTW keep up the good fight against that Gunslinger idiot. Maybe we can flush him out.

tmosley's picture

Don't mistake my use of curse words for anger. I use them in contempt. I could berate fools like what's his face above all day. And do, when I have time. Sadly, not today.

falak pema's picture

I know but my point is that this is now become a game of mirrors on both sides :

Its Charybdis and Scylla. The socialist ideal is a totalitarian prison in REALITY and the Any Rand ideal is an OLIGARCHICAL prison in REALITY. 

I'm saying don't JUNK reality : the real political systems around us. That's all.

Her political philosophy is also totally utopic, IMHO, but that is a separate subject. Its about philosophy, not about belief systems which by definition are subjective. I don't junk her reasoning, I just say its an INCOMPLETE philosophic expression of human experience. But that is normal. Not every body is the Aristotle of his age.

Hey Tepid, any time you want to discuss I'm available...

tmosley's picture

Yes, yes. Clean is dirty. Good is evil. Up is down. Reality doesn't exist. Ignore the man behind the curtain.

falak pema's picture

Reality doesn't exist??? Wow, now that is news...It exists, and can be interpreted differently. That's debate. There are no absolute truths. But then nobody should wear blinkers.

tmosley's picture

You talk EXACTLY like a Randian villain.

I don't mean similarly, but EXACTLY.

No wonder you hate her so much. Her work points out your own extreme inadequacies.

LudwigVon's picture

May God bless you Steel.

falak pema's picture

I don't know what a Randian villain is. I don't hate her but I do disagree with her ideology. If disagreement is villainy then I plead guilty. Pray enlighten me how her work highlights my 'inadequacies'.

tmosley's picture

Hahaha, you haven't even read Atlas Shrugged. No wonder you are so ignorant of Rand.

Specifically, you are Dr. Floyd Ferris, author of "Why Do You Think You Think?"

You claim there is no such thing as objective reality, as he did, and that all is up for debate, as he did. Such "post-modern" thinking is nothing short of disgusting, and its infiltration into academia promises to utterly destroy science in this country.

falak pema's picture

No kidding, "nothing short of disgusting", "objective reality", "destroy science" now that is absolutist thinking like a religious prelate who believes in divine dogma. So you belong to which church? Ayn Rand's congregation of objective, scientific, logical, free market , invisible handed, totally innovative, unendingly productive conclave of entrepreneurs who save science from "post modern" thinking. 

I don't believe in post modern thinking. But I don't accept any school of dogma, as its totally contrary to human history and the evolutionary process of our collective intelligence. Sorry, no perfect markets, no super men, and no delusional belief that one's own personal happiness as mortal, is the uber-alles mantra for self fulfillment.

Hippocrates started a great humanist tradition that was about looking out to healing others, social values not personal navel gazing; it founded medicine, was personified by a work ethic, was in no way or form about personal happiness. The other guy society. It is the basis of civilization.

Atlas shrugged does not address this issue. It is not socially oriented like the teachings of Jesus, Socrates and Hippocrates. None of these were post modern. Sorry no dice.

Bay of Pigs's picture

Maybe read the book again. You missed some points.

Bay of Pigs's picture

Okay, I've had enough, you get junked for general douchebaginess.

falak pema's picture

could you repeat that please?

Sean7k's picture


Please define "American Conservative Ideology". If you look at their actions, they are Statists, Fabian Socialists of the greatest dedication.

The Social Contract was coopted by the Elites to create governments funded by the majority for the benefit of the few.

Plato was an aristocrat that always assumed the existence of a slave class to cater to the needs of the rich. Democracy was for the wealthy.

You decry the utopia, but anarcho-capitalists would never call the free market a utopia and Ayn Rand was not an anarcho-capitalist. Rand remained wedded to the illusion of "public goods". One of the most ridiculous economic concepts ever promoted by Samuelson. 

The question is not whether free market capitalism is perfect, the question is: is it preferable to the existing bankocracy? Is it more efficient in determining value? Does it promote a more level playing field where entrpreneurs can make rational judgements on profit and loss? Does it result in a system where you can actually OWN your home?

The current system of socialism and central banking control of finance is the utimate form of totalitarianism. Anarcho-Capitalism is better than that on its' worse day.


falak pema's picture

I don't junk History. I don't junk : Jefferson, Lincoln, T R, FDR. All these men strengthened the idea of liberty compatible with the state. The whole debate in western society is about this fine dividing line in all areas : social, economic, philosophic and judicial. But the fundamental assumption is that both sides, statists and libertarians, are SINCERE in their arguments. As society has got more complex the role of government has increased to manage this complexity fairly. So we all agree to this 'arbitrage', we all agree to its economic counter part : free markets and government regulation. What has now failed in US society is the corruption and the lack of sincerity, which makes all true debate impossible. As its all false mirrors and manipulated markets as crony, corrupt government. This does not mean that one side of the ideological line is more efficient than the other. To make the debate efficient we have to go back to honest governance. Period.

In fact what you call central banking and socialism, is in my book Free enterprise gone mad and hiding in the garb of central government and social governance. Its all false flags! Its the plutocrats of your libertarian ideology (Reaganomics) that have now become surrogtes of Plutocrats. Out of greed and corruption.

Strike Back's picture

If you think the next step is going to be a lily white futuristic 20XX version of 1955, you are delusional.  That model is dying in front of your eyes.  The people that want that version of society are weak, old-money aristocracy hell bent on preserving their cheeseburger, bourbon, T.V. and prozac lifestyles but no matter how far south you run, progress is going to catch you.  You sound a lot like the other white nationals on here, saying that an integrated society leads to a society of isolated strangers.  You're probably just isolating yourself and blaming your lack of social skills or open mindedness on... whoever.  I don't know where you are, but here in Northern Virginia, I see people from everywhere getting along fine and doing business, exploring different and better ways to live.  One of the only good things in this bearucractic - police/state shithole.

TheTmfreak's picture

From somebody else who is living in Northern Virginia I ask, where the hell are you living?

The "integration" of ethnicities in Northern Virginia is awful beyond awful. Its extremely segregated and its common to bash Mexicans and el salvadorians. Or claim "they are taking over." Or how about the blacks in South East DC?

Sure everyone is living hunky doory out in Ashburn or Great Falls but other places, yeah right. Go tell that to the people living in Sterling where "MS13" has moved in and dropped housing prices. Or Manassas or Herndon (all of which used to be "nice" suburban places until the last decade). Today I'd say that nobody accepts those places are great integrated communities, rather "little el salvador."

I'm not defending that guy's statements by any stretch. I do believe that we have become an EXTREMELY isolated and separated society. Do I think it is ethnicity related? Eh no. That I think has some part of it, but I don't think ethnicity has driven us to, say for example, stare at our cell phones all day everyday rather than interacting with those around us. (Look at everyone around you all day everyday to discover that one). There is no question that ethnicities can integrate together into a community, but I think it takes time to overcome perceived differences, (regardless of what they are). Sometimes it occurs just too fast for some.

edit: In one final question. I hate the terms "progressing." That assumes a linear way of movement and that we are moving "forward" with "progression." Such a simple minded way of viewing the world. "Hey man we are progressing here."  Really? I'd say the US is far from "progressing." Particularly since every perceived difference of opinion (regardless of topic) will label you as racist (if you are white).