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China's Gold Hoarding Continues: Over 2,200 Tons Imported In Two Years

Tyler Durden's picture




 

Paper gold in the developed world may trade based on the whims of marginal momentum chasers, and of course, the daytrading mood of the BIS gold and FX trading desk, but when it comes to physical gold and China's appetite for it, one word explains it best: unstoppable.

After rising to a gross 131 tons imported from Hong Kong alone in August, which was the second highest ever monthly import tally, September saw a modest decline to "only" 116 tons: "only" because it is still 67% more than the amount imported a year earlier. 

The total gross imports since September 2011 is now a whopping 2232 tons. Why September? Because that is when we posted: "Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree." The chart below confirms precisely said reason.

The gross imports year to date are now over 1,113 tons, 91.3% more than the amount of gold imported through September of 2012.

Netting out exports to Hong Kong, September was virtually unchanged from August, at 109 metric tons vs 110 a month earlier. In other words, September was tied for the third highest net import month in Chinese history.

And yes, we realize that to western thinking buying more when the price is dropping in explicable: ironically even the vast majority of gold bugs are merely interested in a momentum conversion in and out of fiat, thus treating gold as an investable, fiat-denominated asset and not as a currency. China, on the other hand, continues to show that when one's only intention is to purchase as much gold as possible to preserve wealth and purchasing power and/or unleash the gold standard back on the world (either alone or jointly with Russia and/or Germany), dropping or plunging gold prices are merely the icing on the cake.

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Sat, 11/02/2013 - 13:10 | 4115400 Gringo Viejo
Gringo Viejo's picture

The West is but very fucked.

Sat, 11/02/2013 - 13:09 | 4115404 bania
bania's picture

conspiracy?

Sat, 11/02/2013 - 13:48 | 4115485 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

The Central Bank of DoChenRollingBearing has a nearly unstoppable hunger to buy more gold as well, limited by its incoming funding of course.

Now that Fringe Blogger Bearing is back in the USSA, buying activity will commence soon.  Our central bank recommends to its investor friends:

Gold, fishez!

Sat, 11/02/2013 - 13:55 | 4115500 Pinto Currency
Pinto Currency's picture

 

This article is somewhat misleading as it equates imports from HK to China as China's gold imports.

The total gold bars delivered on the Shanghai Gold Exchange 2013 YTD is 1750 tonnes so we can be sure that total imports are far more than 2,200 tons in the last two years.

Sat, 11/02/2013 - 14:30 | 4115560 DoChenRollingBearing
DoChenRollingBearing's picture

And China is Number One in gold production, little of which ever leaves...

Sat, 11/02/2013 - 15:04 | 4115618 EscapeKey
EscapeKey's picture

No, you're wrong. The Federal Reserve and JP Morgan are the biggest producers of gold by a country mile.

Sat, 11/02/2013 - 15:24 | 4115654 DoChenRollingBearing
DoChenRollingBearing's picture

Until their reserves run out, smile,,,,

Sat, 11/02/2013 - 15:33 | 4115667 SRSrocco
SRSrocco's picture
TRICK OR TREAT: Fed Smashes Gold & Silver While 2,000 Gold Eagles Were Sold

On Halloween, the FED played a TRICK, while investors had a TREAT of 2,000 GOLD EAGLES sold in one day

Sat, 11/02/2013 - 15:46 | 4115690 Indian_Goldsmith
Indian_Goldsmith's picture

The chinks may have all that, but they haven't got me! ;)

Nor do they have the Gods (godless communists!)

http://indiatoday.intoday.in/gallery/10-richest-temples-of-india/1/5014....

 

Sat, 11/02/2013 - 15:58 | 4115717 markmotive
markmotive's picture

SO what happens to China's gold demand when the Chinese economy blows up?

Hinde Capital on China's Collapse and the Rise of Gold as Official Money

http://www.planbeconomics.com/2013/07/hinde-capital-on-chinas-collapse-a...

Sat, 11/02/2013 - 15:59 | 4115719 James_Cole
James_Cole's picture

WGC report looked fairly healthy, interesting for people who want to understand the mechanics of the price (though people always downvote and rant at me for posting it inexplicably):

http://www.gold.org/download/pub_archive/pdf/GDT_Q2_2013.pdf

Sat, 11/02/2013 - 16:53 | 4115844 Bay of Pigs
Bay of Pigs's picture

No James, there is an easy explanation and one you should be able to grasp.

The WGC is a useless outfit and quoting them on any anything having to do with "understanding the mechanics of the price" of gold is laughable.

Sat, 11/02/2013 - 17:12 | 4115890 Pinto Currency
Pinto Currency's picture

 

2013 gold bar delivery and withdrawal from Shanghai Gold Exchange vault:

 

http://koosjansen.blogspot.ca/2013/10/yearly-chart-shanghai-gold-exchange.html

Sat, 11/02/2013 - 17:27 | 4115918 putaipan
putaipan's picture

and according to the latest willie- they now have a very nice vault in downtown manhattan to store some of it.

Sat, 11/02/2013 - 18:49 | 4116057 ThirdWorldDude
ThirdWorldDude's picture

Willie's been reading ZH: "China's Largest Conglomerate Buys Building Housing JPMorgan's Gold Vault"

 

Welcome to Mrs. Chen's pawn shop at 1 Chase Manhattan Plaza.

Sun, 11/03/2013 - 08:56 | 4117027 TwoShortPlanks
Sat, 11/02/2013 - 19:11 | 4116087 ImReady
ImReady's picture

If I were China I certainly wouldn't be keeping my gold in the US. 

Sat, 11/02/2013 - 19:48 | 4116161 Squid-puppets a...
Squid-puppets a-go-go's picture

maybe they bought it as a goodwill gesture to germany - to do an 'audit' for them

Sat, 11/02/2013 - 19:47 | 4116162 Henry Hub
Henry Hub's picture

What do you mean? If China ever wants to take possession of its gold it only has to wait seven years like the Germans.

Sun, 11/03/2013 - 17:19 | 4117722 KnightTakesKing
KnightTakesKing's picture

We think there is a tunnel between the JPM vault and the FRB of NY. I don't think China would have to wait too long for their gold. 

Fri, 11/15/2013 - 20:43 | 4159649 MeelionDollerBogus
MeelionDollerBogus's picture

so THAT's how you do it... not this...

Sat, 11/02/2013 - 21:50 | 4116392 StychoKiller
StychoKiller's picture

I'm bettin' it's just a collection point for shipments eastward...

Sat, 11/02/2013 - 19:16 | 4116088 James_Cole
James_Cole's picture

The WGC is a useless outfit and quoting them on any anything having to do with "understanding the mechanics of the price" of gold is laughable.

Except that all the 'gold experts' quoted by you (and others) have been approx. 100% wrong for the past year whereas the story presented by the WGC in 2012 was completely accurate. 

Anyone interested in seeing how you've been wrong about everything gold related for the past year can read our past exchanges. 

Cue you going off on some unrelated stupidity "James just doesn't 'get' us goldbugs, we want to averge down our prices by buying at...well whatever the fuck price it currently is, who gives a shit, high / low whatever, it all averages man!!"

So enjoy being a moron, whatever. Anyone with a brain + buying gold should read the WGC reports. 

Sat, 11/02/2013 - 15:39 | 4115680 nuinut
nuinut's picture

Let’s assume the existence of a Big Entity (BE), running a big surplus, and BE wants to accrue a large physical gold reserve commensurate with BE’s high and advancing global status. BE is expecting the future gold price to be much higher vis-a-vis the goods BE produces.

To avoid unduly running the price whilst accumulating, BE indirectly sells gold to those not demanding physical delivery.

If BE sells XAU/USD via an LBMA bullion bank (BB), won’t said BB need to hedge their exposure, by selling commensurate gold futures or other correlated instruments for example? This makes it the BB’s problem to find and if necessary “stimulate” unallocated demand in order to make a low-risk spread. This is what banks do, no? Match supply and demand?

Concurrently, BE could be buying allocated and physical gold from numerous other sources in an artificially depressed market, could they not?

Obviously BE are net overpaying for these reserves, but not necessarily if BE was projecting the future price to be enough multiples of the current price. Any “overpayment” is simply the cost of slowing the ascent of the price and affecting the mood of the market, regularly shaking out weak hands and stop-loss orders.

When the market at last runs away, BE has plenty of otherwise practically worthless T-Bills with which to fulfil contractual obligations to BB, which were accumulated as another leg of the gold accumulation strategy, instilling confidence in the dollar’s debt and thus also reducing gold demand and keeping this gold accumulation option open as long as possible.

There must be some potential future price of gold at which it would be worth the costs to BE to create such a supply, when compared with the crude strategy of just entering the gold market as a physical buyer and immediately running the price and/or bifurcating the paper/physical gold hybrid market.

It's just a matter of whether or not BE believes that potential future price will actually occur or not.

BB just looks like the “bad guy” to goldbugs, but is really a net-neutral tool making the market and collecting the spread.

Expensive gold acquisition from today’s perspective may turn out to be cheap by tomorrow’s, if BE is reading their tea leaves correctly. Just depends how important BE feels it is to acquire more gold reserves.

 

Entire strategy hedged in dollars at all times.

Just a thought.

Sat, 11/02/2013 - 15:46 | 4115692 nuinut
nuinut's picture

I'm not claiming this is happening, just saying it appears feasible.

 

Current movement of bulk physical will sooner or later be moderated by price.

Sat, 11/02/2013 - 16:34 | 4115807 disabledvet
disabledvet's picture

http://koosjansen.blogspot.com/2013/10/pm-trade-switzerland-2013-q3.html and http://seekingalpha.com/article/1776572-weekly-comex-gold-inventories-la... General Motors sales are soaring as a result of the truly staggering energy boom in the Central US. What has been THE feature of this recovery to me has been this: http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2013/Pages... the world runs on diesel fuel...save for the USA which runs on gasoline/ethanol "and dirt cheap cars." in other words this energy revolution has created a massive market for diesel fuel which remains very expensive in my view and will remain so for the forseeable future. In the meantime gasoline...which is basically a waste product...a very dangerous waste product i might add...is now in a massive glut. Why is Fed Ex stock going through the roof? you can run those vehicles on gasoline/flex fuel which right now is dirt cheap and probably about to go a lot lower in price (almost impossible to export (ethanol is highly corrosive)/only used as a transportation fuel.) Right now the Toyota Prius gets a solid 50 mpg's both City and Highway. This is not a small car. If that car becomes the New Normal AND becomes a flex fuel vehicle then the price of gasoline relative to diesel fuel could really "gap out." (4 bucks to a dollar? in effect diesel and "battery" consumers would be subsidizing flex fuel) and Toyota warranty's their batteries for a long time as well. Don't get me started on Tesla and Solar City. http://www.cnbc.com/id/100943620

Sat, 11/02/2013 - 19:06 | 4116079 phaedrus1952
phaedrus1952's picture

Good stuff, Vet.  I am still somewhat surprised that more people do not comprehend the emerging effects of the unfolding energy boom due to unconventional oil field development.

Eagle Ford and the Bakken will be only the seventh and eigth oil fields in history to surpass one million barrels per day output when the Bak hits it shortly. 

As far as transportation fuel goes, I am only now starting to appreciate the impact CNG is/will have on vehicles - esp. heavier, over the road rigs.  There have been several breakthroughs in lowering the costs and operability of CNG engines, as well as the micro-liquification capabilities companies such Dresser Rand are just now introducing to the market (LNGo).  As nat gas costs are bout 1/3 less than diesel - at CURRENT prices - to send a ship/truck/train on its way, I can forsee a continuing surge in this direction.

Cali just signed off on not preventing fracking which may open up the Monterey Shale for development.  The Monterey may dwarf the  Bakken and EF in size.  (As an aside, turns out there have been couple of fracks PER DAY ocurring out here for years as the overseeing govt. peeps never considered it more than routine activity.)  Interesting times.

Sat, 11/02/2013 - 18:15 | 4116007 DoChenRollingBearing
DoChenRollingBearing's picture

@ nuinut

Good seeing you around these parts.

Sat, 11/02/2013 - 18:45 | 4116054 Hulk
Hulk's picture

You can see him ??? Shit, I must be doing sumpin wrong again...

Sat, 11/02/2013 - 19:54 | 4116175 Henry Hub
Henry Hub's picture

I though everyone knew that you had to down load the ZH optical app. to see everyone. Get with the program.

Sat, 11/02/2013 - 19:19 | 4116090 nuinut
nuinut's picture

.

Sat, 11/02/2013 - 19:33 | 4116133 DoChenRollingBearing
DoChenRollingBearing's picture

(well, barely...)

Sat, 11/02/2013 - 19:46 | 4116156 nuinut
nuinut's picture

Hey DoChen, I just changed my mind on something longer I posted there is all, and deleted it.

Nice to see you (if you know what I mean) too.

Sat, 11/02/2013 - 20:55 | 4116280 DoChenRollingBearing
DoChenRollingBearing's picture

.

 

 

;)

Sat, 11/02/2013 - 21:07 | 4116303 nuinut
nuinut's picture

Ohh yeah, this ZH optical app is good isn't it?

Pity you're not a little easier on the eye there, DoChen...

Sat, 11/02/2013 - 15:30 | 4115660 Bobbyrib
Bobbyrib's picture

Paper gold?

Sat, 11/02/2013 - 16:34 | 4115810 CPL
CPL's picture

Nope, real gold and real silver.  Paper will be outlawed.  Period.  Cash and carry from now on is my understanding.

Sat, 11/02/2013 - 19:26 | 4116114 bubblemania
bubblemania's picture

bullish

Sat, 11/02/2013 - 21:49 | 4116388 StychoKiller
StychoKiller's picture

Everybody "Wang Chung" tonight!

Sat, 11/02/2013 - 14:27 | 4115557 Wahooo
Wahooo's picture

Then it must be true in the new normal.

Sat, 11/02/2013 - 16:33 | 4115804 CPL
CPL's picture

Necessity to restore balance in the economic system because it's beyond insane now.

Sat, 11/02/2013 - 13:11 | 4115407 FieldingMellish
FieldingMellish's picture

East hoarding... West unhoarding. New world currency... imminent. 

Sat, 11/02/2013 - 13:39 | 4115471 Manthong
Manthong's picture

When China decides it wants to lob a hand grenade into the US’s and Western world’s mess kit, all it has to do is move a few percent of its reserves into the metals futures market and stand for delivery.

It will do so when it determines that its future growth strategy must be turned away from exports to the Chinese internal market and the nose-diving value of its dollar reserves are fully hedged by its huge gold stash.

Sat, 11/02/2013 - 13:53 | 4115496 Urban Redneck
Urban Redneck's picture

When China does that, they will no longer be able to buy gold at Uncle Ben's CRAZZZY Going Out of Business Sale prices, so it's in their interest to hold that card and keep this sale on going as long as possible...

Sat, 11/02/2013 - 21:49 | 4116387 tarsubil
tarsubil's picture

When China finally does pull the rug out, won't it be war? Won't owning physical gold (which will then be seen as the curse that is "destroying" America's economy) be an act of treason?

Deep down, don't we all know that this is not going to end well?

Sat, 11/02/2013 - 21:58 | 4116405 StychoKiller
StychoKiller's picture

Depends, think Blankfein and Dimon own any Au?  Remember what JP Morgan said:  "Gold is money, everything else is credit."

Sat, 11/02/2013 - 16:08 | 4115735 Being Free
Being Free's picture

China doesn't have to lob anything into our mess kit, O and the statists are doing it for them.  All they need to do is sit back, buy gold, and watch.

Sat, 11/02/2013 - 20:19 | 4116224 AllWorkedUp
AllWorkedUp's picture

and yet, gold cannot go up under any circumstance. Paper gold is plentiful and the criminals in the US own the price. Until that changes, it doesn't matter if China owns all the gold on the fucking planet.

Sat, 11/02/2013 - 14:22 | 4115539 Bokkenrijder
Bokkenrijder's picture

...and that's why I seriously doubt that The West is behind this manipulating down of the Gold price.

Just look at who's selling and who's buying, and then give me one reason why China WOULDN'T be manipulating the price downwards?

China buys 2200 tons in 2 years, and now look at what happened to the gold price during the last 2 years...

Sat, 11/02/2013 - 14:55 | 4115599 spinone
spinone's picture

Why would the USA trade gold for dollars.  It can print them at will for no cost.

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