Shanghai Gold Exchange Volume Soars To Record As India Gold Imports Surge To 18 Month High

Tyler Durden's picture




 

While the recent move in gold lower, attributed primarily to the fickle rotations of assorted hedge funds who have gotten crushed on their AAPL holdings and thus forced to liquidate profitable positions mostly in ETFs and other paper gold representations (as demand for physical precious metals has never been greater), has seen many pundits scream (as they do every year) that the move higher in gold and precious metals is over, what everyone as usual forgets is that the big move up in gold in 2011 was not driven by Soros or Paulson or Einhorn buying (or selling) laughable amounts of the yellow metal but by relentless end consumer demand out of China and India, when inflation was surging. And with the entire world now openly reflating the one country that has the lowest buffer to hot external money - China - is about to see prices for all products go parabolic once more. It's just a matter of time. Of course, last week's Lunar New Year and closed exchanges bought some time for the bearish gold thesis, but that is now over, quite literally with a bang as demand out of both China and India explodes out of the gates, proving that the sensible money is merely waiting for every dip in the PM complex to buy.

As GoldCore reports, gold volumes for the benchmark cash contract on the Shanghai Gold Exchange soared to a record today (see chart below), as the market re-opened after the New Year’s week long holiday and bargain hunters started buying.

The volume for bullion of 99.99% purity exceeded 22,000 kilograms (22 metric tons), according to data compiled by Bloomberg. Prices fell 2.8% to 327.25 yuan/gram ($1,630.29/oz) as of 5:04 p.m. Singapore time.

“Chinese investors returned to the market today after the holiday, and the slump in gold prices in the past week provided great incentive for buying as many Chinese are still holding a bullish outlook on gold,” Qu Mingyu, a trader at Bank of China Ltd., the 4th largest lender

by assets, commented today.

As for India, this article from the  Gulf Today should put to rest any worries that Indians have, after centuries of treating gold as true money, suddenly stopped doing so after a brief 10% pullback.

India’s gold imports surge 23% in January

India’s gold imports in January surged 23 per cent from a year ago to their highest in 18 months as traders snapped up supplies ahead of a hike in duty, undermining the government’s efforts to control a ballooning current account deficit.

The world’s top bullion buyer imported 100 tonnes of gold last month, the head of the Bombay Bullion Association said on Friday. This is about 40 per cent more than the country’s average monthly imports last year.

“The total imports figure for 2012 was around 860 tonnes, so 100 tonnes in a month is too high. Also oil is trading firm above $95 (per barrel), so this will impact the oil import bill and overall deficit targets,” said Navneet Damani, associate vice president with Motilal Oswal Commodities.

Alarmed by the mounting current account deficit that hit a record 5.4 per cent of gross domestic product in July-September the government moved to rein in its gold imports - second only to oil in value - by raising the import duty on the precious metal to 6 per cent from 4 per cent on Jan.21.

“So many people imported and dumped gold after rumours from the first week of January of an import duty hike. People waited for the duty to increase and earn more profits,” said Mohit Kamboj, president of the Bombay Bullion Association.

The government will announce its budget for the year beginning April 1, 2013 on Feb.28 and if gold imports continue apace, traders are concerned New Delhi may take further action to curb demand.

The Reserve Bank of India has indicated it could limit gold imports by banks, which corner about 60 per cent of the supply, if the deficit remains at 5.5-6 per cent of GDP for the next three to four quarters

 Given India’s passion for the precious metal, traders and industry experts expect any impact from the Jan.21 duty hike to be short term. They see imports tapering off in February and March and the bearish mood lifting after that.

Gold is considered a sign of wealth and good fortune, and is traditionally given at weddings and festivals in India.

Demand could be as much as 965 tonnes in 2013, the World Gold Council said on Thursday, without giving an estimate for imports. In 2012, imports accounted for virtually all the demand of 864 tonnes at 860 tonnes - down 11.25 per cent from a year ago, partly as a result of a previous tax hike.

Spot gold prices have gained for the last 12 years and its attraction, while Indian inflation continues to eat into returns from other investments, remains high.

If prices do not rise any more in the next two to three months, buying will re-emerge, said Daman Prakash Rathod, director with Chennai-based MNC Bullion.  India’s fiscal deficit is expected to reach 5.3 per cent of gross domestic product by the end of March.

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Mon, 02/18/2013 - 09:49 | 3252666 SDRII
SDRII's picture

http://www.reuters.com/article/2013/02/18/gold-mint-idUSL6N0BI2YX20130218

 

Britain's Royal Mint has started to manufacture gold sovereign coins in India for the first time in almost 100 years, it said on Monday.

Mon, 02/18/2013 - 10:40 | 3252739 edifice
edifice's picture

That's impressive... I didn't think they actually had any gold.

Mon, 02/18/2013 - 10:46 | 3252747 ATM
ATM's picture

They don't. They borrow it.

Mon, 02/18/2013 - 11:03 | 3252773 DaveyJones
DaveyJones's picture

India has a very simple Gold strategy. They keep their volume in inverse proportion to their water table.

Mon, 02/18/2013 - 11:27 | 3252848 BaBaBouy
BaBaBouy's picture

India Should Join The Modern Western Whirld,

And Buy All Thier GOLD On PAPER, And Stored At Secret Wharehouses On "The Fuck Knows Where Street"...

Mon, 02/18/2013 - 11:34 | 3252903 DaveyJones
DaveyJones's picture

"fuck knows" - that's biblically redundant.

So, is that different than buying the Stairway to Heaven?

Mon, 02/18/2013 - 12:56 | 3253202 Harlequin001
Harlequin001's picture

'attributed primarily to the fickle rotations of assorted hedge funds who have gotten crushed on their AAPL holdings and thus forced to liquidate profitable positions mostly in ETFs and other paper gold representations'-

WTF. When you're getting crushed on an asset you don't sell something else, you either buy a short or sell it. You still have to book the loss at months end regardless.

Time to stop with the excuses, the pm market is just as manipulated as the Treasury market, and there is no good reason to say other. If silver was fairly priced there would be no need for HSBC to go and buy 180,000 ounces of silver because supply would equal demand. They had to buy silver because demand is far outstripping supply, period, and they short it heavily with paper to floor the price whilst they still can with paper money backed by your taxes.

Quit with the excuses, please...

We are giving our assets away on the cheap so that politicians can claim to be doing a good job. They are selling us out and they should be hanging from trees. Period.

Mon, 02/18/2013 - 11:38 | 3252910 BaBaBouy
BaBaBouy's picture

AND On It Goes ... NYC SELLS And Chinee BUYS ...

Shanghai Gold Exchange benchmark contract volume jumps to record

By Glenys Sim and Feiwen Rong
Bloomberg News
Monday, February 18, 2013

http://www.bloomberg.com/news/2013-02-18/shanghai-gold-exchange-benchmar...

Gold volumes for the benchmark cash contract on the Shanghai Gold Exchange climbed to a record today as the market re-opened after a weeklong break and lower prices lured buyers.

The volume for bullion of 99.99 percent purity exceeded 22,000 kilograms (22 metric tons), according to data compiled by Bloomberg. Prices dropped 2.8 percent to 327.25 yuan a gram ($1,630.29 an ounce) as of 5:04 p.m. Singapore time. Markets were closed last week for the Lunar New Year holiday.

"Chinese investors returned to the market today after the holiday, and the slump in gold prices in the past week provided great incentive for buying as many Chinese are still holding a bullish outlook on gold," Qu Mingyu, a trader at Bank of China Ltd., the nation's fourth-largest lender by assets, said by phone from Shanghai today.

Mon, 02/18/2013 - 11:51 | 3252962 DaveyJones
DaveyJones's picture

"pride goeth before the fall"

Mon, 02/18/2013 - 15:28 | 3253792 Stock Tips Inve...
Stock Tips Investment's picture

The price of gold continues to correct. Still no sign of a turnaround in the short term. High levels of gold buying in China and India may have consequences in the future. I mean the speed and extent of recovery of the gold price. Of course, when this happens.

Mon, 02/18/2013 - 09:54 | 3252667 GetZeeGold
GetZeeGold's picture

 

 

Might as well get some....it's on sale.

 

Ben Shalom takes your grandkid's money and slams PMs so he can even he can buy it cheap......he ain't nobody's fool.

Mon, 02/18/2013 - 11:04 | 3252777 DaveyJones
DaveyJones's picture

True, the elite hate being called a nobody

Mon, 02/18/2013 - 14:49 | 3253682 Panafrican Funk...
Panafrican Funktron Robot's picture

The thing that gets me as far as jewelry demand, is this humorous notion that "because most gold is traded due to jewelry demand, it's merely a commodity, not money", as if that were some sort of excuse for "price volatility"/suppression.  Let's examine that for a moment:

Scenarios:

1.  You give a lady $5000 USD and say "will you marry me?" 

2.  You give a lady a gold ring with a diamond that cost you $5000 and say "will you marry me?"

Consider, this is (at base) a request for vaginal exclusivity for an extensive period of time (up to and including potentially life).  This is the most prized thing a woman possesses.  In scenario 1, you would be on the receiving end of a triple-pimp slap and and admonishment "what do you think I am, some kind of two-bit whore!?"  In scenario 2, you would have a decent chance of trading that ring for potentially lifetime vaginal exclusivity.

Now, why would a woman get pissed about USD's, but happy about a gold/diamond ring?  Consider another scenario:

1.  You give a dude $2 trillion ZIM's (zimbabwe dollars) and say "will you marry my daughter?"

2.  You give a dude 5 goats and say "will you mary my daughter?"

Similar concept here.  You would be insulting your own daughter by offering such toilet paper in scenario 1.

Point?

All commodities are money in some way, shape, form, or fashion.  If it can be traded, it is money.  Gold is particularly good functionally as money, but really anything of value (even actual toilet paper) is going to be a better thing to store your wealth in than fiat paper/digits.  

Mon, 02/18/2013 - 09:59 | 3252670 LawsofPhysics
LawsofPhysics's picture

and yet the price in fiat remains range bound.  No manipulation there...  This should end well (like it has every other time moral hazard and fraud runs wild - world war).

Mon, 02/18/2013 - 11:52 | 3252971 Non Passaran
Non Passaran's picture

I strongly disagree. I wouldn't be stacking if I expected WW III anytime soon.

But I am keeping some cash to burn through it with pleasure in the unlikely event you are correct.

Mon, 02/18/2013 - 15:42 | 3253829 strannick
strannick's picture

You'll be burning through it in your fireplace

Mon, 02/18/2013 - 09:54 | 3252672 Lost Wages
Lost Wages's picture

Yep. All those hedge fund managers are right. Looks like a gold bear market to me.

Mon, 02/18/2013 - 09:56 | 3252674 Navymugsy
Navymugsy's picture

Turn those machines back on Mortimer or some such expression...I hate holidays.

Mon, 02/18/2013 - 09:56 | 3252675 Motorhead
Motorhead's picture

Good heavens, this story should be worth about 35 more stories and interviews on King World News.

Mon, 02/18/2013 - 10:01 | 3252682 GetZeeGold
GetZeeGold's picture

 

 

Until it gets hacked.......again.

Mon, 02/18/2013 - 10:01 | 3252683 Motorhead
Motorhead's picture

Hehe, yeah, man, no shit!

Mon, 02/18/2013 - 10:09 | 3252694 Lost Wages
Lost Wages's picture

I have to wonder who is doing it.

Mon, 02/18/2013 - 10:53 | 3252761 Charles Nelson ...
Charles Nelson Reilly's picture

 

Charlie Munger.... Culprit.

Mon, 02/18/2013 - 11:39 | 3252927 OutLookingIn
OutLookingIn's picture

Big cash buys talent.

Even 'hacking' talent.

Who's got the "big cash"? And if they run short, they just print more!

What better way to combat the 'truth' on the net, then hacking and taking down the truth tellers?

Just sayin. Follow the money.

Mon, 02/18/2013 - 09:57 | 3252676 Sudden Debt
Sudden Debt's picture

Those leopold 20's are looking mighty cheap right now!

 

Mon, 02/18/2013 - 10:53 | 3252758 mayhem_korner
mayhem_korner's picture

 

 

I'm sorry, but when I hear "leopold", I can only think of this...

http://www.youtube.com/watch?v=gt1V61SPI_w

Mon, 02/18/2013 - 09:58 | 3252678 francis_sawyer
francis_sawyer's picture

Nothin like a good party...

Mon, 02/18/2013 - 10:00 | 3252681 Motorhead
Motorhead's picture

I'm ready for a St. Feuillien blonde.

 

Mon, 02/18/2013 - 10:05 | 3252687 new game
new game's picture

Waiting 9/10 bears then sale begins

down trend will hit reality

wade release soon

29.25-35 silv

1550-60 gold

JMFO

Mon, 02/18/2013 - 10:30 | 3252720 mayhem_korner
mayhem_korner's picture

 

 

The real price of gold and silver is how many fiats you need to part with to get it physically in your possession.  Right now, that is about 1,690 USD/oz. gold and 35 USD/oz. silver. 

Mon, 02/18/2013 - 10:46 | 3252748 LawsofPhysics
LawsofPhysics's picture

correct, the decoupling is accelerating.

Mon, 02/18/2013 - 11:08 | 3252789 DaveyJones
DaveyJones's picture

like everything else

Mon, 02/18/2013 - 11:47 | 3252953 Non Passaran
Non Passaran's picture

I was looking if someone will comment on the price.

The article says that on SGA it fell to $1,630/oz. According to Kitco, it didn't cross $1,615/oz.

The delta may be something worth tracking in coming weeks and months... 

To your point: I buy physical (e.g. last Friday, silver) at a low mark-up and I'm not seeing any shortages or extraordinary mark-ups and never have. Sometimes I wonder if some of you get your stuff from stores that don't sell a lot, but I know there have been posts that of relatively significant premium even at large dealers... That's why I can't say to have a good answer to that mystery of higher prices you're seeing in your neck of the woods.

Mon, 02/18/2013 - 14:46 | 3253668 Stuntgirl
Stuntgirl's picture

Shortages and markups vary wildly from one part of the world to another.

I think the US markup on silver is gigantic, can't judge shortages personally.

The markup in PIIGS is also huge, for both gold and silver, especially gold. (silver is a special case, carries VAT). There is not much retail demand for phys.

No shortages in SE Asia, markups on goldlarger than in PIIGS as I've seen.

What part of the world are you in?

Mon, 02/18/2013 - 12:54 | 3253197 fomcy
fomcy's picture

Depends what you are buying.. Here 10oz brand new Silver bars 59 cents overspot, Delivered FREE.

http://www.tulving.com/bullion/ntr_10_oz_999_bu_silver_bars.htm

And Gold coins special 30$ over spot Free delivery

http://www.tulving.com/Australian/2013_kangaroo_9999_1_oz_gold.htm

Great company, I alway buy from them, cheapest prices, Free overnight delivery.

 

Mon, 02/18/2013 - 18:25 | 3252697 nathan1234
nathan1234's picture

Nearly all Indians are aware that their Governments are corrupt and that banks cannot be trusted/depended on .Now with the scams galore

 it only reinforces their thinking and actions.

They also know that the paper currency they use has reducing value each day.

For centuries the rural Indian has always saved his wealth by holding/buying gold and silver only.

From what i hear from friends in India, it appears that after the British left India, an Italian empress is now doing the looting along with her cohorts.

 

Mon, 02/18/2013 - 10:19 | 3252701 scatterbrains
scatterbrains's picture

I had never even considered that they may have blown the fake gold market bubble so large (in order to divert and dilute money from the physical market) that the effect of margin selling or damage control because of losses in stocks like AAPL (even though CFTC is lowering margins on gold as fast as they can) or fund redemption could collapse the paper market at the same time the world is scrambling to secure as much real physical gold as possible.  The question is where does the line cross between the influence of paper being flushed and scarcity of real gold cross ? How low can GLD go ?  Where ever that line is, either right here or 20 points lower is where it finally becomes obvious to all what's going on and the gold market is going to explode higher and never look back.

Mon, 02/18/2013 - 10:20 | 3252703 LawsofPhysics
LawsofPhysics's picture

History has a very clear answer to your questions.  Simply put, all paper promises can easily go to zero.  When fraud is the status quo, possession is the law.  Some things never change.

Mon, 02/18/2013 - 10:40 | 3252736 scatterbrains
scatterbrains's picture

I mean I was aware of all the everyday manipulation going on but this margin selling in GLD and SLV could develop into a storm that even JPM didn't see coming and it's influence on physical gold which is getting smaller and smaller could create a major opportunity to back up the truck in real gold (if you can find it) before most folks realize what's going on. 

Mon, 02/18/2013 - 10:44 | 3252741 mayhem_korner
mayhem_korner's picture

 

 

Watch the premiums on physical gold and siliver (currently about 4.5% and 14%, respectively, depending on where you look).  Those spreads are a proxy for the paper-physical decoupling and give a better indicator of the real price.

Mon, 02/18/2013 - 10:45 | 3252744 LawsofPhysics
LawsofPhysics's picture

correct, moreover, "most folks" are completely oblivious to these things.  Stupid fucking sheep that are nothing more than cannon fodder at the end of the day. It is what it is, move on and protect yourself and family.

Mon, 02/18/2013 - 11:15 | 3252812 DaveyJones
DaveyJones's picture

It's a self feeding fraud - resource depletion I think. The fraud has never been worse because the credit systems have never been so far removed from a real economy based on physical things and valid promises looking forward. The fraud increases justified by those in power trying to hide it or the stupid ones thinking more of the same solves it. I debate which one is the greater force but my "criminal" instincts and history bend me in one direction.   

Mon, 02/18/2013 - 11:25 | 3252851 mayhem_korner
mayhem_korner's picture

my "criminal" instincts and history bend me in one direction.

 

Not sure what image you were shootin' for with that word choice, Davey... Great post though.

Mon, 02/18/2013 - 11:30 | 3252880 DaveyJones
DaveyJones's picture

a prison, priestly & politician comment korner

Mon, 02/18/2013 - 11:33 | 3252900 mayhem_korner
mayhem_korner's picture

 

 

lol...very nice.

Mon, 02/18/2013 - 11:41 | 3252923 DaveyJones
DaveyJones's picture

Had to, presidents day and all

I was thinking about presidents day and maybe we should have a class presidents day instead and use it as a holiday. I know they're not historically important, but they've caused less destruction.

Mon, 02/18/2013 - 14:43 | 3253662 silverserfer
silverserfer's picture

the banking cartel is just one big bunga bunga circle jerk party.

Mon, 02/18/2013 - 14:57 | 3253697 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

It makes me wonder whether people are also losing faith in Eric Sprott and PHYS & PSLV where the premiums to NAV have plummented to record lows (PHYS = 1.22%, PSLV = 1.39%).

Mon, 02/18/2013 - 12:15 | 3253055 Son of Loki
Son of Loki's picture

"Possession is 10/10ths the Law," my Dad used to say.

Mon, 02/18/2013 - 10:22 | 3252705 kw2012
kw2012's picture

Russia, China, India and probably a few others are hoarding gold. So WHO is dumping it to keep prices down so low? I don't think I will like the answer.

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