China Opens Largest Private Gold Vault With Capacity For $82 Billion Worth Of Precious Metal

Tyler Durden's picture


It was not enough for China to buy JPM's landmark former downtown Manhattan headquarters, once the stomping grounds of David Rockefeller and the current location of the firm's massive, and arguably largest in the world, gold vault (which, as Zero Hedge first demonstrated, is located just next to gold vault of none other than the NY Fed). It seems that for the nation that has unleashed the world's biggest ever buying spree of physical gold -oblivious what the price of paper gold does on a daily basis - having purchased over 2000 tons of gold in the past two years as we showed recently...

... now the question is just where to store it.

Not surprisingly, in the Chinese bastion of capitalism, where there is demand, there will be supply. And in this case, the supply of gold storage is to be found in the Shanghai Free Trade Zone, where the physical gold ends up in custodial limbo as it is not considered "imported" by China. In fact, the gold is theoretically in no man's land and as such can be reexported out of China, or sent deeper into the mainland, to China's banks or private buyers, on a whim. Of course, all that is on paper. If and when the Communist Party says "enough" all the gold in the FTZ would be "reappropriated."

Bloomberg reports, that a gold vault that can store 2,000 metric tons, double China’s projected consumption this year, opened in Shanghai this month as owner Malca-Amit Global Ltd. seeks to benefit from rising demand in Asia’s largest economy.

The facility is the biggest for the Hong Kong-based company, and it can also store diamonds, jewelry and art, Joshua Rotbart, precious metals general manager, said in an interview. The site could hold bullion worth about $82.5 billion at today’s price, Bloomberg calculations show. China’s total demand may reach 1,000 tons in 2013, the World Gold Council forecasts.

Someone should tell China that just because the price of gold is sliding, it should stop buying the inflation-protecting metal. Then again, perhaps China knows all about the gold price and is reacting accordingly:

Consumption in China may increase 29 percent to a record this year, overtaking India as biggest user as lower prices and higher incomes spur demand, according to the WGC. The investment in Shanghai’s new free-trade zone reflects a shift in world demand away from the U.S. and Europe toward Asia. Demand for gold jewelry, bars and coins in Greater China, India, Indonesia and Vietnam is now about 60 percent of the global total, up from 35 percent in 2004, according to HSBC Holdings Plc.


Such a facility is a massive vote of confidence for the Chinese gold market,” said Philip Klapwijk, managing director of Hong Kong-based Precious Metals Insights Ltd. “The trend for demand has been very strongly positive,” said Klapwijk, who’s monitored precious metals since 1988.

This is just the beginning of the great physical gold warehousing:

“There’s going to be more gold coming to China,” Rotbart said on Nov. 5. “This place can be used as a trade hub basically, so foreign banks can trade with domestic banks within this facility, saving costs and time.”


Bullion has been flowing into mainland China even as local output increased. Net imports from Hong Kong more than doubled to 826 tons in the first nine months of the year, according to Bloomberg calculations based on government figures. Local output rose 8.2 percent to 270.2 tons from January to August.


Shanghai is home to the country’s biggest physical gold exchange, founded by the People’s Bank of China. Gold volume on the Shanghai Gold Exchange rose to a five-month high of 22,703 kilograms on Oct. 8.

So how is it possible that with all the massive Chinese demand, gold is sliding? Simple: levered paper positions via ETFs are being unwound, and the resulting gold ends up in China as physical.

“There’s been a lot of gold being sold out of ETFs, all of that is outside of China,” Victor Thianpiriya, a Singapore-based analyst at Australia & New Zealand Banking Group Ltd., said by phone today. “A lot of that has found its way to China via Hong Kong, attracted by demand for bullion bars.

Which means that as levered paper trades are unwound, the underlying physical finds its way in China. For now, since the developed market has convinced itself there is no need for truly safe collateral, the premium on, and demand for, paper gold has tumbled, as has the associated rehypothecation velocity on the underlying. However, when demand for gold collateral surges once more, due to any of the types of events witnessed in 2010, 2011, or 2012, or inflation in China once again surges like it did in 2011, the story will change very quickly. Only this time, it will be China holding the apex of the "High quality collateral" pyramid.

And should the same level of demand for gold return as was seen in any of the prior years, then one will have to pay substantially more in fiat for the privilege of holding a truly safe asset. Especially since that actual physical asset will ultimately be located behind a massive safe door some 80 meters below the ground in Shanghai, which in turn will allow China to demand whatever fiat price it wishes for those once again scrambling into the safety of the yellow metal.

More on the Shanghai gold vault in the clip below:

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Tue, 11/12/2013 - 20:01 | 4148072 Sufiy
Sufiy's picture

US Dollar And Gold This Week - Taper Talk And Who's Gonna Make The Walk

We have quite an interesting print in US Dollar today - with all Taper assured talk from both side of the FED's mouth, US Dollar has ended with a big hesitation question mark. We do not know what to take here with all ongoing market manipulation, but would like to point it out and will be watching this week action in USD very closely.

Tue, 11/12/2013 - 20:04 | 4148082 LetThemEatRand
LetThemEatRand's picture

They couldn't even taper a few percent without the markets going into full panic mode.  They will jawbone the idea to death, and it will always be right around the corner like prosperity.  If there is a taper which I seriously doubt, it will be very small and very short-lived, followed by a ramp up beyond the insane money printing already taking place.

Tue, 11/12/2013 - 20:09 | 4148100 AllThatGlitters
AllThatGlitters's picture

Watch them laugh at our silly little dip in price and work a little harder towards filling that vault tonight:

Live Spot Gold Chart:

Tue, 11/12/2013 - 20:30 | 4148173 highandwired
highandwired's picture

If they can't fill it with gold, they will fill it with Bitcoin

Tue, 11/12/2013 - 23:06 | 4148572 TwoShortPlanks
TwoShortPlanks's picture

Gold to fund Asian Empire

To understand exactly what’s happening in the Gold Space we must look at the really big picture; STEP. BACK!

Tue, 11/12/2013 - 23:18 | 4148614 old naughty
old naughty's picture

ant people (=muppets) do not need empire, ptb do...

so, opening gold vault in FTZ, installing NSC headed by Xi (just announced), what else will this second head of the chimera not looking like UsSA (Empire?)

Tue, 11/12/2013 - 23:11 | 4148595 Manthong
Manthong's picture

wtf.. a lousy 2K metric tonnes??

i explained to the fambly that 10 tonnes was about the size of the refrigerator.. although the floor joists might have little problem with that load and I might end up with a little metal in my lap down here in the basement.

ok.. bring it.


Wed, 11/13/2013 - 02:45 | 4149017 Theosebes Goodfellow
Theosebes Goodfellow's picture

Okay, call me nuts, but am I the only person who has a problem trusting communists, (the absolute and total "appropriators if there ever were any), with my phyzz? Yeah, yeah, they were only commies for what?... 75 years and have been doing business for 3000, but I just don't get a big warm fuzzy trusting these pricks with my hard-earned, if you know what I mean. Hell, I don't get a warm fuzzy from trusting anybody with my stacks. Why have a counter-party when I don't need or want the exposure? The point is now moot though, as once again I have discovered the hard way that booze, PMs and boating just don't go well together...

Tue, 11/12/2013 - 21:01 | 4148276 wee-weed up
wee-weed up's picture



Anyone who would trust the ChiCom govt...

To hold their gold & silver for them needs their head examined!

Wed, 11/13/2013 - 01:17 | 4148889 SilverRhino
SilverRhino's picture

Right now I trust them and the Russians MORE than the US government and the Western banking system.   Which is pretty goddamned sad IMO. 

Tue, 11/12/2013 - 20:02 | 4148077 rubiconsolutions
rubiconsolutions's picture

Does anyone have the physical address? I want to ship all my AG and AU over there for safekeeping.

Tue, 11/12/2013 - 20:15 | 4148117 RaceToTheBottom
RaceToTheBottom's picture

Congrates on not losing yours in a boating accident.

Tue, 11/12/2013 - 20:16 | 4148124 Apostate2
Apostate2's picture

Malca-Amit (Shanghai) Trading Company Ltd.
Room 906A, 9/F, Tower B, The China Diamond Exchange Centre,
1701 Shiji Avenue, Pudong, Shanghai, China
P.C. 200122
Tel: + 86 21 6109 0668
Fax: + 86 21 6165 2915

Tue, 11/12/2013 - 21:05 | 4148294 Trucker Glock
Trucker Glock's picture

"I want to ship all my AG and AU over there for safekeeping."

Just wait for them to open the vault in their new former-JPM building.  That way you can swing by and polish it whenever you want.

Tue, 11/12/2013 - 20:03 | 4148078 SafelyGraze
SafelyGraze's picture

"Capacity For $82 Billion Worth Of Precious Metal"

note to self:

metal is measured in ounces

not fiats

Tue, 11/12/2013 - 20:08 | 4148096 TeamDepends
TeamDepends's picture

Dem Go Long

Tue, 11/12/2013 - 20:20 | 4148142 thisandthat
thisandthat's picture today's price

Tue, 11/12/2013 - 20:28 | 4148168 Running On Bing...
Running On Bingo Fuel's picture

I like it better measured in LBS.


Tue, 11/12/2013 - 20:03 | 4148079 DoChenRollingBearing
DoChenRollingBearing's picture

The Central Bank of DoChenRollingBearing is jealous!

Tue, 11/12/2013 - 20:04 | 4148080 The Alarmist
The Alarmist's picture

MOAHT .... Mother of all honey traps.

Tue, 11/12/2013 - 20:05 | 4148087 joego1
joego1's picture

Check mate.

Tue, 11/12/2013 - 20:07 | 4148092 Yen Cross
Yen Cross's picture

    They should reserve a small section in that vault for Bitcoin USB Thumb Drives...

Tue, 11/12/2013 - 20:15 | 4148122 quasimodo
quasimodo's picture

For sure, since we all know bitcoin is safe and secure.......never any worries with bitcon!

Wait, what's this? Hmmmm, check this link out. I CAN'T fathom how on earth this could happen!


"A Chinese bitcoin trading platform suddenly shut down and up to $5 million worth of bitcoin disappeared with it, a reminder of the great risk associated with the digital currency."




Tue, 11/12/2013 - 20:59 | 4148259 LM
LM's picture

OMG! How is this possible? People lost their assets after giving them to a swindler! Hurry, buy gold, at least it has a magical immunity to fraud!

Tue, 11/12/2013 - 21:04 | 4148284 Poor Grogman
Poor Grogman's picture

So let me get this straight.

if you were a scam artist, you could set up a bogus bit-coin exchange and just wait till everyone has their BTC there. Then simply dissapear with all the electronic loot???

This thing is dangerous!

We need to regulate it, for everyone's safety.

Tue, 11/12/2013 - 20:08 | 4148094 oddjob
oddjob's picture

So just one month of QE could fill it, yawn.

Tue, 11/12/2013 - 20:10 | 4148105 joego1
joego1's picture

It does give you a perspective for the size of the black hole the Fed is creating.

Tue, 11/12/2013 - 22:40 | 4148511 Squid-puppets a...
Squid-puppets a-go-go's picture

one month prior to the price reset

Tue, 11/12/2013 - 20:08 | 4148097 Bay of Pigs
Bay of Pigs's picture

"So how is it possible that with all the massive Chinese demand, gold is sliding? Simple: levered paper positions via ETFs are being unwound, and the resulting gold ends up in China as physical."

Just as many goldbugs stated here for the last 3 plus years that GLD (and other ETF"s) were bankster frauds designed to suppress the price of gold, not support it.

Conspiracy FACT.

Tue, 11/12/2013 - 20:09 | 4148099 falak pema
falak pema's picture

So when does ZH move to HK or Shanghai?

Tue, 11/12/2013 - 20:11 | 4148108 RaceToTheBottom
RaceToTheBottom's picture

China should send the US FED their thanks for giving them the sales price. 

The deal to NOT have them dump their US paper is safe, for the time being.....

Tue, 11/12/2013 - 20:55 | 4148258 Its_the_economy...
Its_the_economy_stupid's picture

honor among thieves? i think not. no deal.

Tue, 11/12/2013 - 20:13 | 4148112 unwashedmass
unwashedmass's picture

jesus christ, we are so fuckin' dumb. so fuckin' dumb. 

Tue, 11/12/2013 - 20:15 | 4148118 A Lunatic
A Lunatic's picture

The joke is on them because you can't eat gold, lolololololololol.........

Tue, 11/12/2013 - 21:52 | 4148404 Midas
Midas's picture

You think that is bad, wait until they find out the greatest banker in the world considers it nothing more than an out-dated tradition.  They are going to feel so dumb!

Tue, 11/12/2013 - 20:19 | 4148119 noob
noob's picture

!Repository 4 das stupids?

!Get some!

Tue, 11/12/2013 - 20:31 | 4148167 bankonzhongguo
bankonzhongguo's picture


You and the Yuan will not be taken seriously until "the Vault" is in Beijing and under direct control of the CCP/MOF and surrounded by the PLA.

Still running your country like a bunch of farmers.

A thousand ghost cities, but not an open and notorious challenge to the dollar?

chabuduo tongzhi.

'The policy of letting a hundred Black Swans fly ...'

Even this yeren can call this kettle black.

Tue, 11/12/2013 - 20:40 | 4148207 youngman
youngman's picture

Sounds like they are trying to build a safe and secure hiding place...I bet they don´t have to report to the IRS anything...GS will fill it with all of their stolen...I mean shorted gold soon...hidden from view of the USA and the 99%

Tue, 11/12/2013 - 20:45 | 4148223 AllWorkedUp
AllWorkedUp's picture

They can buy gold until there's no more left and it doesn't make a shit bit of difference as long as they allow Comex and LBMA to set the price. Imagine if you were Chinese and saw this corrupt bullshit every day. You gotta be asking - like we are, "why do these fucktards let the US determine the price of gold and silver?

Hate to say it but Bitcoin looks better every day. I'm sick of these criminals.

Tue, 11/12/2013 - 21:05 | 4148292 jonjon831983
jonjon831983's picture

BitCoins for Tungsten (exploration) "Miner to Pay in Bitcoins for Work at Tungsten Project"


Irony perhaps... tungsten.

Tue, 11/12/2013 - 21:26 | 4148337 olto
olto's picture


Tue, 11/12/2013 - 21:28 | 4148346 Big Ben
Big Ben's picture

The site could hold bullion worth about $82.5 billion at today’s price, Bloomberg calculations show.

According to my calculations: 2000 metric tons X 1000 kg/ton X 30 oz/kg (approx) = 60 million oz

At $1300/oz, that would be around $800 billion.

Wed, 11/13/2013 - 01:49 | 4148936 Kirk2NCC1701
Kirk2NCC1701's picture

Try again:

Thu, 11/14/2013 - 16:14 | 4155338 MeelionDollerBogus
MeelionDollerBogus's picture

You forgot to carry the 5 before taking the integral.

Thu, 11/14/2013 - 16:11 | 4155325 MeelionDollerBogus
MeelionDollerBogus's picture

2000 metric tons = 64301493.1 troy ounces @ $1300 / ozt : $83,591,941,030 approximations per unit on millions just doesn't cut it. 1 kilogram = 32.1507466 troy ounces
Tue, 11/12/2013 - 21:37 | 4148359 alfred b.
alfred b.'s picture


@250 ton/vault, China is gonna need 20 of these vaults just to hold their 5000 ton perceived hoard....possibly the other 19 will be in Beijing, with some probably already built!!!


Wed, 11/13/2013 - 01:45 | 4148929 dunce
dunce's picture

It is said that possession is 9 tenths of the law, but if the government has complete control then do you really have possession? Any gold in any bank vault is under government control.

Thu, 11/14/2013 - 16:07 | 4155315 MeelionDollerBogus
MeelionDollerBogus's picture

PAGING Simon Black, paging Simon Black...

Wed, 11/13/2013 - 08:50 | 4149281 RealityCheque
RealityCheque's picture

Why can't they just bury it in the back yard like normal people?!

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