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China/India Gold Demand: 2013 Déja Vu
Originally posted on Sprott Money October 6, 2014
In 2013; a chain of events led to what was (at the time) the greatest stampede into gold in human history. It began with the Cyprus Steal, the West’s first “bail-in”. This led to the realization (by the Smart Money) that no paper assets were safe any longer, within any Western financial institution or market.
In turn, this led to an unprecedented stampede out of the banksters’ paper-called-gold “products”, primarily their ultra-fraudulent bullion-ETF’s. With the paper-called-gold market being 100 times larger than the real (physical) gold market; this naturally caused a plunge in the official price of gold.
It was at this point that the stampede into (physical) gold began. Some of this demand was from the West: sellers of these vast quantities of paper-called-gold suddenly saw the wisdom in holding real bullion: having physical custody of their asset, and thus zero counterparty risk.

Most of the demand, however, came from the East. With the price of gold falling roughly 30%, from already depressed levels; this was nothing less than a “dinner chime” for Pavlov’s dogs. Unlike the serf-populations of Western nations; appreciation (and understanding) of precious metals has not been blunted by roughly 30 years of relentless anti-gold (and anti-silver) propaganda.
With this Eastern understanding; the world had already been witnessing a relentless transfer of the world’s bullion holdings from West to East. Thus like women flocking to a shoe-store sale; this “30% off” on the price of gold in 2013 led to a spike in Asian demand beyond anything previously seen.
As indicated in a previous commentary in June of last year; at that time both China and India were on a pace to import roughly 2,000 tonnes of gold – surpassing any previous total for either nation. China, indeed, ended 2013 with net imports exceeding 2,000 tonnes, according to gold analyst (and China specialist) Koos Jansen.
Gold demand in India was temporarily derailed, however; as India imposed (what was at one point) a near-total embargo on (legal) gold imports into that nation. This draconian measure was a capitulation to blackmail from the One Bank, which had caused a “currency crisis” in India by attacking the value of the rupee in (rigged) global FX markets. The bankers made it explicitly clear that nothing less than a dramatic drop in gold imports would/could rescue the rupee from these currency market attacks.
Official imports into India plunged dramatically, and India ended the year having imported considerably less than 2,000 tonnes. A precise number is not possible; as the legal restrictions on gold imports into India reignited gold smuggling into that country. Indeed, the Indian government had spent years previously “liberalizing” its gold market, precisely in order to stem blackmarket flows across its porous borders.

As gold-smuggling exploded, and it became more and more obvious that a legal ban on importing gold could not stop the flow of bullion into that nation; the bankers themselves capitulated, and allowed India’s government to restore official gold imports to somewhere close to “normal” (i.e. pre-2013 levels). However, making it easier to legally import gold into India has not resulted in a drop-off in smuggling. Indeed, recent reports indicate that gold-smuggling into India is accelerating further.
Now, as more bankster manipulation has caused a (relatively) modest further retreat in bullion prices (roughly a 5% recent drop in the price of gold, and 10% for silver); we see indications of gold demand into China and India returning to that torrid pace of 2013 – just as the beginning of the seven-month “gold season” in India looms before us.
One would never know this, however, from listening to the mainstream propaganda. According to the “World Gold Council”, the sycophantic industry trade group which claims to represent the global gold-mining industry, but actually functions as nothing more than a mouth-piece for the bankers; “consumer demand” into China was only 1097 tonnes last year. This is roughly half the total reported by Mr. Jansen.
As explained by Jansen; this is just more of the bankers’ lying-with-numbers, which we have now come to expect in the gold and silver markets. Regular readers here are already familiar with the serial, absurd lies which we have been fed (primarily over the past decade) concerning “inventory levels” for the gold and silver markets.
We now see even quasi-mainstream analysts simply ignoring the WGC propaganda, and reporting on China import totals for 2014 via the methodology put forward by Koos Jansen: focusing on “SGE delivery data” (the Shanghai Gold Exchange). Based on those numbers, and with recent demand accelerating; we see China once again on pace to approach (or exceed?) that 2,000-tonne level.
Meanwhile, with gold-smuggling spiking, official imports steadily rising, and Indian (gold-buying) “festivals” approaching; India is once again importing gold into the country, legally and illegally, at roughly an annualized rate of 2,000 tonnes per year. Almost certainly, total imports will fall short of that number in 2014 due to the earlier (temporary) disruption of import restrictions. But if one were to take a snap-shot of the gold market today, in many respects it would look nearly identical to the mid-point of 2013.
There are, however, some key differences between the snap-shot from 2013 versus the snap-shot of 2014, making this not quite “déjà vu all over again” (to quote the legendary Yogi Berra). The first of these differences is the overall context of the market itself.
In 2013; gold demand in China and India was exploding to previously unprecedented levels, and as a direct consequence of a dramatic drop-off in price. In 2014; there has not been any sudden/precipitous fall in price, nor are such demand levels “unprecedented” any more. Indeed, to borrow the propaganda buzz-words of the Corporate media; such massive, Asian demand now appears to be “the New Normal”.
More specifically; the context within the giant gold market of India (still the world’s largest repository and hub for the global gold trade) could not be more different. In the middle of 2013; torrid gold demand into that market was about to be (temporarily) curtailed via the extortion operation of the One Bank.
In the fall of 2014; import restrictions into India are still being relaxed, as the One Bank has ‘thrown in the towel’ with respect to its efforts to block the flow of gold into that nation. Meanwhile, gold-smuggling routes into that nation have been fully (and permanently?) re-established. In 2013 the flow of gold into India was about to be interrupted; in 2014, it appears that demand can only go higher.
This raises a question to which no commentator has been able to supply (definitively) a satisfactory answer: where is all this gold coming from? In 2013; with Indian/Chinese gold demand at this level, we saw what can only be characterized as a “panic response” by the One Bank: its draconian (but futile) attack on the Indian gold market.
In 2014, however, with gold demand in these two, giant markets at similar levels (and rising?); we see absolutely no sign of any similar panic from the Western banking cabal. Unless this is merely a façade; it suggests one of two explanations. Either the banksters are unafraid/unconcerned about such demand because they have (somehow) come up with a means of satisfying demand at this level; or, they have simply resigned themselves to some sort of near-term “default” event in global markets.
With respect to the former explanation; one area where the banksters have had some success is with respect to introducing various forms of their paper-called-gold and gold-fraud into China’s gold market. Indeed, here we also see some “Chinese entrepreneurs” seeking to emulate Western fraud in the gold market.

From fake-gold bars to bogus “collateralized loans”; we now see most of the gold crimes which are either well-known or long-suspected in the West being copied in China (but on a much smaller scale). Along with that; we see explosive growth in gambling (rather than investing) in the gold market by Chinese players, in one form or another of paper-called-gold.
Geopolitically, the One Bank has also been busy looting the gold of other nations, mostly through getting its puppet-government in the United States to overthrow the governments of other, gold-rich nations – and then installing new puppets (eager to please their Western masters). Ukraine and Libya are just two recent names which come to mind in this regard.
The near-total lack of transparency in these fraudulent markets makes any precise conclusion at this time impossible. The only inference which can be offered with some degree of reliability is that whatever the explanation to which one subscribes, 2015 is likely to be a “more interesting” year than 2014.
This brings to mind the purported, Chinese curse: “may you live in interesting times.”
-------- Jeff Nielson for Sprott Money
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Where all this gold is coming from ??? Seems like an endless stream of the stuff… zillions of it…
I am starting to believe they discovered more than they expected back on the Manhattan project...perhaps the transmutation of yellow frogs to gold...
and explain again how silver is going along for the ride....
GLD is being slowly bled dry. Inventory is down to 725 tons from 1350 in December 2012. SLV inventory is fine. there seem to be silver blank shortages but lots of the metal.
Gold IS a central bank asset, silver lost that role in 1935 when China threw in the towel.
Gold is about to be repriced so that it can act as a central bank reserve. Silver ...ain't.
All you silver stacker...get some gold. I understand the allure of a 'better ratio' and massive dollar profits. Silver will do well only on its own merits. It is gold, gold, gold that NEEDS to be repriced. Silver does not and will not be.
Consider this...if you had to hide $10,000 of metal would you rather have to hide gold or silver.
I'm trying to help you guys.
I realize most silver stackers just won't listen. It would be easier to convert them to Islam. Better think hard though because the window is closing.
Sorry Eric........No matter HOW you look at it. WE ARE IN A BEAR MARKET stupid ass .......
Thewayit IS ......
Stop trying to fuck everybody
way
u r right...we are in a bear market FOR PAPER GOLD!
The physical is drying up though...when there is no more physical we will see what the meatal is really worth.
again I say unto ye
Once again Sprott misreads the tea leaves.
GLD loses another 2 tons today.
The price of gold can't go higher while the paper market exists. If it goes lower the godless commies and the polytheists of India will scoop up ecery last tael and tola on the planet.
When there is 'no more gold'...THEN we'll learn the real price.
It will take a failure of the paper market to get firm hands to sell.
The recurring meme on ZH is that the Fed and or other CBs are responsible for driving the price of gold down by dumping paper shorts into an illiquid market... Makes sense for all the repeated reasons we keep reading.
At one point a few months ago, an article was posted here that suggested that it was the Chinese who were driving the price down to get the bargain prices they wanted on phys gold.
I have not read any further on the theory that it is the Chinese who are driving the price down and, sorry, I cannot locate the original article.
Is there any credence to the theory that it is the Chinese who are driving the price of gold down and are there any articles appearing elsewhere that support this view?
Doubtful that the Chinese are driving it down, but a virtual certainty that they are delighted to remain passive and take full advantage for the time being. The suggestion that there was a behind-the-scenes agreement between the U.S. and China along the lines of "keep buying U.S. Treasuries, and we'll facilitate your (cheap) acqusition of gold" is interesting, but I'm skeptical.
I remain on the side of Occam's Razor: the U.S. is desparate to promote continued confidence in the Dollar, and gold surpression remains a primary tool.
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Western CBs work to provide East CBs bountiful gold at lowest prices.
When gold rises, paper gold is dumped by Western banks for sake of new Eastern empire. Cover all bases, provide for new bosses and one day find riches in service to the same.
Call it treason if you will but probably a fact. IMHO.
High demand? Obviously this will drive prices down since we are in the Krugmanomics world. Economics - supply and demand - no longer valid. Gravity doesn't work either. <sigh...>
disregard-
I can't believe the Indian government even TRIED to restrict gold! Who are they kidding? C'mon, I'm a housewife from PA, and even I could have told them it was pointless.
Indians have a long, strong love of gold, and consider it real wealth. Most of it is being worn by their women. And most of THAT is in the rural areas. "Gold loans" are THE way those people finance anything, because they are mostly unbanked. It is a deeply rooted cultural tradition, and not the kind of thing you can legislate away.
That the Indian leaders didn't consider this before passing laws is just further proof that none of our world leaders really know what they're doing. What was their plan for all those rural folk after you restrict their gold, and they are still unbanked? Where they supposed to just pile into stocks, hedge funds? "How many Apple shares will you give me for this bushel of rice and this crate of chickens? Do they pay a dividend?"
The Indian leadership likely knew well they would just create a black market. They were probably pushed by the IMF to pass those laws.
People may not agree with or like the Indian attitude towards gold but this is the way it IS. India's love affair with gold.
https://www.youtube.com/watch?v=sUr2E4dfs0Y
According to Koos Jansen all gold entering the SGE must be remelted bofore leaving again regardless of the form in which it enters. Could it be they are producing tungsten filled bars and just want to make sure they are all that way? Naw not possible with those honest Chinese.
I hope my Pandas are real...maybe I'd better test them...
55
I did
I got some 1/10 ounce Pandas (at spot). I though the deal was 'too good' so I cut one open...homogenious and beautiful to the core!
Please ZH and Sprott. Please give credit where credit is due. Much of this article is taken word for word from here:
http://bullionbullscanada.com/gold-commentary/26561-chinaindia-gold-dema...
Hello - Sorry for the confusion.
The author credited at the end, Jeff Nielson, is Bullion Bulls Canada. He is a contributing author for Sprott Money. The original is posted on SprottMoney.com HERE.
Thanks for making that clear. Jeff Nielson is a very valuable contribution in understanding the gold market and I always enjoy reading his perspectives.
Yeah, where is all this gold coming from? At what point will sprott say that maybe they were wrong and their figures are incorrect?
Is it possible that Sprott has really over estimated Asian demand for physical? If their figures were true, it would mean that all Central Banks are working together to fill the production gap required to meet all this Indian/Chinese/East Asian/Middle Eastern physical demand?
IMO the Central Banks are playing a big shell game here. If so, this means they can probably do this for a while longer if they can keep the bare minimum of physical PM's available and settle the rest of future contracts in cash.
I bet China might even be in the game too since it's to their benefit to have gold cheap and dollar high since they have so many.
The problem is more fundamental - one cannot analyze gold as if it were an industrial commodity. The total supply and demand of gold at any given time is almost 180,000 tons, as all the gold ever mined still exists above ground. So wondering whether a few hundred tons went to X or to Y is completely useless. Gold must be analyzed like a currency, not like a commodity. And right now, several of the fundamental drivers of the gold price are actually bearish. That is certain to change again, but it hasn't changed yet.
Sorry Eric........No matter HOW you look at it. WE ARE IN A BEAR MARKET stupid ass .......
Thewayit IS ......
Stop trying to fuck everybody
way
u r right...we are in a bear market FOR PAPER GOLD!
The physical is drying up though...when there is no more physical we will see what the meatal is really worth.
Let's see -- Paper gold is worth nothing and so everyone who can "think" is bailing out of it because it is worthless. These same Smart people are buying physical at the paper defined price.
Now enter the stupid people. "Gold is in a bear market" is what the stupid people say.
Just think a little and keep on buying REAL gold.