Chinese Gold Imports Soar To Monthly Record On Insatiable Demand

Tyler Durden's picture




 

In what must be an inexplicable move to momentum-chasers everywhere, as gold continued to decline in price in March, and long before its targeted smash in April, China was not backing off its gold purchases of the yellow product. Quite the contrary: as export data released by the Hong Kong Census and Statistics Department overnight showed, Chinese gold imports in March exploded to an all time record high of 223.5 tons. This follows 97.1 tons in February, and brings the total imports for the first quarter of 2013, or 372 tons, on par with what China imported in the entire first half. It also means that since January 2012, China has imported an absolutely stunning 1,206 tons of gold. Putting this number in context, this is 20% more than the entire reporter official gold holdings of 1054 tons, and represents roughly half of the total 2500 tons of gold mined every year (a number which is set to decline as gold miners find current prices unsustainable and are forced to shut down production).

Comparison of Chinese gold imports: 2012 vs 2013:

And sequential change in Chinese gold imports since January 2012 or when the gold fever in China was truly unleashed:

The latest official Chinese holdings:

And if March was a record month for China, we can't wait for April when prices plunged and when physical buyers, who unlike paper momentum chasers buy more then lower the price falls will see the recent take down as a buying opportunity (if they can find physical of course). From Reuters:

Chinese gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.

 

"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.

 

"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.

 

"April imports will be stronger than March," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "The world was buying gold and China was no different at all."

And therein lies the rub: because if China fails to mask the ongoing soaring hot money inflows as reported earlier, and which amounted to over $180 billion in q1 as reported earlier, just watch as Chinese demand for physical goes truly off the charts.

The rest of the story is well known but here it is from Reuters:

In March, Shanghai gold futures fetched premiums of more than $30 to global prices, making it cheaper to buy the metal overseas.

 

April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.

 

The drop in prices has prompted a gold rush in China, with Chinese shoppers flocking to retailers to buy jewellery and bars.

 

A spokesman for Hong Kong jewellery chain Chow Tai Fook, the world's largest jewellery retailer by market value, told Reuters that traffic at its China stores jumped by 50 percent during the May Day holidays.

 

The surge in Chinese travellers during the three-day May Day holiday also drove gold sales in Hong Kong to rise by an estimated 50 percent, with total gold sales from April 29-May 2 reaching some 40 tonnes, local media quoted Haywood Cheung, president of the Hong Kong Gold and Silver Exchange, as saying.

 

The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said.

What about New York vaults? And specifically the biggest gold vault in the world, located 90 feet below 1 Chase Manhattan Plaza?

Or is there maybe a correlation between the record drawdown in JPM's commercial holdings and the record break out of Chinese gold fever? We hope to find out soon.

As for the increasingly irrelevant spot price of gold paper derivatives, we can only hope "experts" like Paulson et al can continue their liquidation of gold ETF "holdings" for as long as possible: after all one can buy far more gold more when the price is lower, not higher.

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Wed, 05/08/2013 - 09:32 | 3540659 LawsofPhysics
LawsofPhysics's picture

So many paper promises to deliver, so little real assets (physical gold).  Applies to many aspects of the current eCONomic system.  Now about that pension...

Wed, 05/08/2013 - 09:34 | 3540668 Pladizow
Pladizow's picture

-_- say, "We so solly we take all round eye gold."

Wed, 05/08/2013 - 09:40 | 3540689 Agent P
Agent P's picture

"You see Mr. Powers, I rove gooooorrrrd!!!"

Wed, 05/08/2013 - 09:49 | 3540710 AllThatGlitters
AllThatGlitters's picture

 

Gold already ripping higher this morning.

 

Short-Squeeze Starting? Check out the live price: 

http://www.pmbull.com/gold-price/

Lately, I've been reading a lot of capitulatory comments from former gold longs, backslapping from gold skeptics and breathless reports from agnostic TA folks that the gold bull is over. This was the best signal that gold was gonna head higher.

Yet, gold bars on that page are *still* available and *still* at just $25 over spot. Unlike silver, retail can still get in on the act.

Wed, 05/08/2013 - 09:49 | 3540732 nope-1004
nope-1004's picture

Ya, price controls work!  LOL.

 

Wed, 05/08/2013 - 10:43 | 3540774 Abraxas
Abraxas's picture

The plan is to sell all of our gold to Chinese and Indians, then decide that they have WMD and that they use biological and chemical weapons against their own people; we'll then liberate their people and liberate them from the gold that we just sold them. Hell, we can do it again and again...

Wed, 05/08/2013 - 11:34 | 3541273 cynicalskeptic
cynicalskeptic's picture

unless we go broke first and can't pay for the oil that runs our War machine....  for a time the military might of the US may serve to forestall complete collapse  but despite the dreams of neocons, it will NOT make it possible for the US to dominate the World for another 50 years, insuring that the US gets first in line access to energy and raw materials.  Worked out REAL well in Iraq and Afghanistan.......

We're trying desperately to contain China's growing power and influence (look at the expansion of US troop presence in Africa) but being blunt - they outnumber us, and have a far larger productive capacity when it comes to making things.

The US Empire is not healthy.   As the $US is used less and less as the currency of trade, it's value drops more and more.  The old days of printing more $US when you needed to buy things is going fast.  Now printing more $US only means the price you have to pay is going to be higher.  The rest of the world has caught on to the game.

History has shown that nations and empires grow and then collapse.  Nobody is exempt from that evolution.

And as for China's gold holdings...... wanna bet they're holding FAR more than 1000 odd tonnes?      It's in China's interest to NOT have the price go up and to NOT have the rest of the world be aware of what they have and how fast they're accumulating - UNTIL Chiuna has converted over the $US they hold into gold and other hard assets and is ready for a reset in the world trade model.   That reset is already happening slowly with nations negotaiting direct exchange agreements.  Tha day of the $dollar as the medium of exchange for all world trade is coming to an end.

Wed, 05/08/2013 - 11:45 | 3541320 Shevva
Shevva's picture

I'm thread jacking cause the Chinese are hiding more than bad data.

http://www.thesun.co.uk/sol/homepage/news/4919629/chinese-authorities-tr...

Wed, 05/08/2013 - 12:33 | 3541340 Pinto Currency
Pinto Currency's picture

 

With these levels of monthly physical gold delivery at the Shanghai Gold Exchange, there must  be other sources of Chinese gold than Hong Kong.

http://www.goldminerpulse.com/v/shanghaiGoldExchangePhysicalDelivery.php

 

What prevents Chinese interests from standing for delivery with GLD shares that they purchase?

Aircraft from London and Switzerland can land in Shanghai as well as Hong Kong.

A quick search yields the following:

 

Are there other routes to import gold other than Hong Kong?

http://www.thechinamoneyreport.com/2012/08/16/chinese-gold-imports-hit-383-tons-so-far-in-2012/

"D.Collins

August 16, 2012 at 3:07 pm

Hi Jerome-
From my understanding, Hong Kong is the only hub of gold imports.
But….we know China has access to obtain gold through unofficial channels.
For instance, sov. wealth funds, large commercial banks, etc…
Every few years or so they all of a sudden announce a huge increase in reserves.

Reply Ali August 20, 2012 at 2:53 pm

Hi,

An African investor told me every now and then Chinese Navy ships will dock in a friendly Afrcan port, offloading miltary supplies and load up the physical gold. This lends great weight to what MrCollins has said in his comment.

Ali

 

---------AND--------

http://www.gold-prices.biz/home/chinas-gold-imports-do-we-really-know-the-quantities.html

The Hong Kong Statistics Department reported that China imported 102,779 kilograms of gold from Hong Kong in November, an increase from October’s 86,299 kilograms. This is usually a reliable source of information regarding transactions between the two party's. However, are we to assume that Hong Kong is the one and only supplier of gold to China. Do we really expect that the Chinese, who are intent on building up their gold reserves, would go to just one shop? We doubt that very much, hence the cloak of secrecy surrounding Beijing when it comes to much matters.

Wed, 05/08/2013 - 09:51 | 3540738 TeamDepends
TeamDepends's picture

What if it's true that Europe's wealthiest families are all seeking to take custody of their large bars?

Wed, 05/08/2013 - 10:51 | 3541065 Herd Redirectio...
Herd Redirection Committee's picture

Then the only people's gold whose gold will remain unallocated will be the avg man's gold.

Wed, 05/08/2013 - 21:32 | 3543305 FEDbuster
FEDbuster's picture

Except mine and most of the posters here at ZH.  Ours is either in our gun safes or at the bottom a lake somewhere.

Wed, 05/08/2013 - 09:56 | 3540773 BobPaulson
BobPaulson's picture

If you mean its return to the price it was at Monday, yeah, I saw that. Keeping it real here. I will break out the champagne when it reestablishes the ramp it was on before the pummeling it has taken over the past two years.

Wed, 05/08/2013 - 10:01 | 3540805 Ignatius
Ignatius's picture

The thing to watch out for is if we lose (already lost/losing?) the Comex/LBMA as a reliable price signals. 

FOFOA predicts a crash in the paper price of gold only to re-emerge in physical-only trading at massively higher prices.

Be ready.  Anything can/will happen.

Wed, 05/08/2013 - 10:25 | 3540923 Meat Hammer
Meat Hammer's picture

Agreed.  I have some toilet paper with pictures of dead presidents on hold for just such an occassion.  

Wed, 05/08/2013 - 11:00 | 3541092 TeamDepends
TeamDepends's picture

Ours has some live presidents on it as well.  Oh wait, you're talking about cash....

Wed, 05/08/2013 - 12:16 | 3541430 Pinto Currency
Pinto Currency's picture

 

FOFOA's idea is a  neat idea, however there is more gold trading in the world than on the Comex.  The physical gold off-take would be enormous from London, Mumbai, Dubai, Shanghai, Hong Kong, etc. and the markets do not operate in isolation.  There is this thing called the internet now.

Wed, 05/08/2013 - 11:09 | 3541158 Herd Redirectio...
Herd Redirection Committee's picture

Nucleo Direct, bitches.

If that isn't the closest proxy for an unmanipulated Comex/LBMA I don't know what is.

Wed, 05/08/2013 - 11:36 | 3541283 cynicalskeptic
cynicalskeptic's picture

Just try and use it for TP and you'll be snaking out your waste pipes for a LONG time.  Bank notes make for LOUSY toilet paper unless you're using an outhouse over a pit (and even tehn, they're not so soft.

Wed, 05/08/2013 - 12:10 | 3541413 DoChenRollingBearing
DoChenRollingBearing's picture

Ignatius

You wrote: "Be ready.  Anything can/will happen."

Yes, quite correct.  FOFOA's prediction looks benign in print, but when we see the paper price go down, even thos of us with strong hands holding physical Au start feeling queasy...

Wed, 05/08/2013 - 14:28 | 3542016 Ignatius
Ignatius's picture

Exactly.

Wed, 05/08/2013 - 10:02 | 3540808 ParkAveFlasher
ParkAveFlasher's picture

Yeah but tomorrow will be back down again. 

Bury it in a time capsule already.

Wed, 05/08/2013 - 09:49 | 3540735 whirling tword ...
whirling tword freedom's picture

You American have such a rarge penis!... It's sooooo rarge.   Very rarge penis.

Wed, 05/08/2013 - 09:40 | 3540695 new game
new game's picture

not sure i believe what china says...

Wed, 05/08/2013 - 09:48 | 3540729 Keynesian Mess
Keynesian Mess's picture

This is one they would probably lie about to the downside, not the upside.

Wed, 05/08/2013 - 12:12 | 3541418 DoChenRollingBearing
DoChenRollingBearing's picture

That is my suspicion as well.  I have read that they may have much more than they say.

Wed, 05/08/2013 - 10:23 | 3540920 fuu
fuu's picture

I was just coming in to say that the perceived quality of Chinese data releases depends mostly on confirmation bias.

Wed, 05/08/2013 - 10:11 | 3540860 fattail
fattail's picture

Ironically, the chinese invented paper money; so i guess it is no suprise they understand its intrinsic value.

Wed, 05/08/2013 - 10:49 | 3541055 CrazyCooter
CrazyCooter's picture

False. If people actually LEARNED from history, the global society we would have right now would be orders of magnitude more advanced than this mess.

People have to live it in order to learn it, thus the cycle of stupidity.

Regards,

Cooter

Wed, 05/08/2013 - 09:53 | 3540763 Bokkenrijder
Bokkenrijder's picture

Of course there are lies, big lies and Chinese/HK statistics!

Wed, 05/08/2013 - 10:33 | 3540957 DosZap
DosZap's picture

AND for the SECOND month India pulls in another 100 tons, 2 months in a row.AND, 600 Tons of Silver!.

Wed, 05/08/2013 - 09:33 | 3540660 Cognitive Dissonance
Cognitive Dissonance's picture

2013.....The Chinese Year of the Golden Barbarous Relic

<And 2014 and 2015 and 2016 and.....>

Wed, 05/08/2013 - 09:32 | 3540662 EscapeKey
EscapeKey's picture

Yes, but how much paper did they import?

Wed, 05/08/2013 - 09:34 | 3540669 LawsofPhysics
LawsofPhysics's picture

They are printing yuan as well.  The Chinese people have been here before, they know inflation all too well.

Wed, 05/08/2013 - 09:44 | 3540720 EscapeKey
EscapeKey's picture

I was being facetious. I guess I should add the "/s" next time.

Wed, 05/08/2013 - 09:52 | 3540754 gmak
gmak's picture

In fact, that is why the communists were first able to get a foothold - because the mandarins (ruling elite - sound familiar?) engaged in self-serving practices that led to rampant inflation and ubiquitous poverty in the populace.

Wed, 05/08/2013 - 09:34 | 3540671 Cognitive Dissonance
Cognitive Dissonance's picture

They will import as much paper as can be converted into Gold and Silver and not a single toilet tissue more.

Wed, 05/08/2013 - 09:58 | 3540785 BobPaulson
BobPaulson's picture

The true finesse is converting paper to physical without calling "fire!". One trick is to not export a single flake of domestic production and keep that unreported.

Wed, 05/08/2013 - 10:53 | 3541073 CrazyCooter
CrazyCooter's picture

Yeah, that is probably while Kyle Bass didn't take the advice I emailed him to convert his gold purchase a couple years back into a "Golden Bevo" and roll it out at all the home UT football games.

He probably bought more and didn't tell anybody instead. Kyle is a clever dude!

Regards,

Cooter

P.S. What ever happened to their attempt to get the physical bullion. Wasn't that part of what ol' Perry was shooting his mouth off about? I haven't been in TX a couple years now, totally out of the TX news loop.

Wed, 05/08/2013 - 11:38 | 3541290 cynicalskeptic
cynicalskeptic's picture

"They will import as much paper as can be converted into Gold and Silver and not a single toilet tissue more."

 

Those paper $US are still very useful for buying up mining companies, farmland in Africa and long term energy contracts.   China is being astute in converting paper promises into hard assets.

Wed, 05/08/2013 - 14:41 | 3542062 Kirk2NCC1701
Kirk2NCC1701's picture

Speaking of "being astute"... Why do I have to point out the obvious:  The math does not add up! 

The US has 8100 tons and this represents 75% of reserves, but China's 1100 tons represent 1.6%?   Oooookaaay. ROTFL.

Wed, 05/08/2013 - 10:04 | 3540824 augustusgloop
augustusgloop's picture

huge amounts of scrap paper!  sad. we sell scrap to china, they add value and sell it back to us:

http://www.cnbc.com/id/44716908

Wed, 05/08/2013 - 11:18 | 3541205 Stuck on Zero
Stuck on Zero's picture

One thing for sure. Chinese products go from the showroom to scrap yard incredibly fast. 

 

Wed, 05/08/2013 - 09:33 | 3540663 Shell Game
Shell Game's picture

And the US remains a net gold exporter.  Yes, this will end well...

Wed, 05/08/2013 - 09:35 | 3540675 EscapeKey
EscapeKey's picture

Well, Archduke Bernanke has with his profound wisdom declared that gold is not money.

What, do you suggest he's got his head up his arse?

Wed, 05/08/2013 - 09:40 | 3540698 Shell Game
Shell Game's picture

It seems that is where he mines his nuggets of wisdom..

Wed, 05/08/2013 - 09:43 | 3540712 Kayman
Kayman's picture

Well, we had a BigMac eating President owned by the Chinese, why not Bernanke ?  After all, loyalty and fidelity to country is now in the free market.

Wed, 05/08/2013 - 11:26 | 3541242 Quinvarius
Quinvarius's picture

Well if he had not lied, and he had said gold is money, JPMs super whale trade would have ended them within 24 hours.  The situation is so bad these guys have lie like Madoff about everything.

Wed, 05/08/2013 - 13:05 | 3541646 Kirk2NCC1701
Kirk2NCC1701's picture

"And the US remains a net gold exporter.  Yes, this will end well.."

... for (a) China and (b) Goldman Sachs and their growing Chinese operations. 

Got the picture, ZH?  Any tentaculous questions?

Wed, 05/08/2013 - 09:34 | 3540666 rehypothecator
rehypothecator's picture

China: 372 tons, 1Q 2013.  Germany: 350 tones: "That will take seven years."  

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