China Curbs Gold Imports To Slow Capital Flight

Tyler Durden's picture

While all eyes were on India (as rumors swirled of an imminent gold import ban), The FT reports that China curbed gold imports in the wake of government attempts to clamp down on capital leaving the country, according to traders and bankers.

Some banks with licences have recently had difficulty obtaining approval to import gold, they said — a move tied to China’s attempts to stop a weakening renminbi by tightening outflows of dollars, the banks added.

 

The hit to gold imports comes as China tightens restrictions on overseas deals by state-owned companies in an effort to limit capital outflows that has seen the renminbi fall to its lowest against the dollar in eight years.

When the headline hit, gold futures legged lower, but are rebounding...

As The FT notes, quotas for importing gold have been cut during quarterly assessments this year. Banks also have dollar quotas, some of which must be used when buying gold.

The limits on imports bite as the weakening renminbi raises Chinese investors’ interest in gold. Lower gold prices have also triggered more buying.

 

The combination of tighter quotas and an uptick in demand caused the premium for gold in China over the international gold price to jump as high as $46 in the past few weeks, according to data from Wind Information. Normal levels are about $2 to $4.

 

In an effort to ease that premium, Chinese banks have been allowed to import gold under their quotas using the offshore renminbi, one banker said. Although still high, the premium for gold on the Shanghai Gold Exchange has since fallen to $26, according to Wind data.

If the restrictions on imports are sustained that could raise questions about China’s moves to open its gold market to international traders. The world’s largest consumer of the precious metal has moved to have a greater voice over the price of gold.

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Pinto Currency's picture

+$22 /oz more in Shanghai than in London for gold.

http://didthesystemcollapse.com/

Curbing imports will just increase smuggling.

First India now China trying to limit gold buying.

johngaltfla's picture

Once the USD breaks out above 120, watchout below. In the mean time, prepare to go shopping in 2017 for gold at relatively good bargain prices:

Gold Died Today so Get Ready for Retest of 2016 Low Prices
nope-1004's picture

according to traders and bankers

lmao.  Then it MUST be true.


BullyDog's picture

I guess the cupboards are finally bare.    I wondered how long before the system dried up.

 

 

eclectic syncretist's picture

From the actual article:

"According to traders and bankers. Some banks with licences have recently had difficulty obtaining approval to import gold, they said." 

https://www.ft.com/content/1cf17928-b706-11e6-961e-a1acd97f622d

Since when does limiting the number of bankster outfits that can import equate to limiting the total amount of gold that can be imported? This is just another gold hit piece by bankster funded FT writer Henry Sanderson in London, written to disguise the downward manipulation of the paper price of gold in London and New York against the 3% higher price of physical gold in Shanghai.

And parroted here by Zerohedge. Sad.

americhinaman's picture

this FT story is nonsense.  

china encourages its citizens to buy gold.  gold imports reduce their trade surplus figures (which the US and other deficit countries cry about), and the chinese government understands that gold serves as a foundation for their paper money base.  it is ridiculously easy to find an outlet to buy gold at when you are in china, most banks offer physical bullion trading at a bid/offer of rougly 0.4% for a ounce (lower for larger transactions), and gold jewelers are all over the place for those who prefer bling.

it is a misnomer to call it a "china premium" for gold, from the perspective of chinese.  why not call it a "western discount"?  to the extent that gold is cheaper abroad, it makes plenty of sense for chinese travelling abroad to buy gold and bring it back home.  the final proof of all this is the customs policy... no restriction on bringing gold into the country, but you have to declare if you want to take gold out.  just more proof that china wants more gold in the country and is in no way restricting it.

http://english.customs.gov.cn/Statics/88707c1e-aa4e-40ca-a968-bdbdbb565e...

eclectic syncretist's picture

Totally agree. These machinations are nothing more than an attempt to cover up the fact that the price of paper gold in London and New York is being manipulated downwards. Why London and New York would be supportive of all the West's physical gold moving to the East is the real question we should all be focusing on. 

buckstopshere's picture

Hard to predict the bottom.

Dollar-cost-averaging is the way to go.

Raffie's picture

Seems the PM are the one stop area where all forces attack 24/7.

Kill the real money and raise the phony fiat.

So It Goes's picture

LOL.  

Everybody has an opinion as to the short, medium, and long term price of gold.  This is just another opinion.  

Gold is a bargain at any USD price now.  Bulls make money, bears make money, but pigs get slaughtered.  

Why wait until mid next year to up more physical?

Who cares to get the last nickel if your thesis is that there will be a currency collapse - because in the end the dollar is no good - it is just based on debt which can never be repaid.  

Buying an ultimate bottom is for amateurs.  Dollar cost average into your insurance policy - physical precious metal in your possession outside of the banking system.  Buy a little each month that you can afford to sit on.  The waiting is hard, but the outcome is certain IMO.

buckstopshere's picture

Seriously, that's what I do.

I buy four times a month.

I don't think too much about it. It's like wondering if 1999, 2000, or 2001 was a good time to buy gold. They were all good times compared to now.

People who don't know how it all ends need to read these books and get educated.

https://mises.org/library/ethics-money-production

https://mises.org/library/mystery-banking

BeanusCountus's picture

So true. It fluctuates. Just like everything else.

fbazzrea's picture

yep... turtle wins this race. steady. one purchase at a time.

and of course, always BTFD. (;

MFL5591's picture

No one finds the Gold price down 15 out of 16 days a little supsicious?  What the fuck kind of game is this? 

eclectic syncretist's picture

Back in the good old days Zerohedge would have published an honest article like this one:

"As central and bullion banks in the West continue to beat down the price of gold in their paper derivative markets, the spread between the Asian physical and Western paper gold prices will continue to widen.  And at a certain point, producers of gold will find it much more profitable to simply ship their metals directly to China rather than to continue to supply the Comex or LBMA, who's manipulation of the spot price using 100's of naked short contracts no longer reflects the true price of the precious metal."

http://www.thedailyeconomist.com/2016/11/spread-between-london-paper-gol...

Instead they now apparently regurgitate the Financial Times bankster bloviations. Disappointing.

Slomotrainwreck's picture

First India now China trying to limit gold buying.

It's difficult to decrease gold buying. I tried it once and it didn't last long. Before I knew it, I was buying like crazy.

LetThemEatRand's picture

A worldwide currency crisis is afoot.   I can smell it.

Billy the Poet's picture

If you wash that foot it won't smell so bad.

FullHedge's picture

Nah. The central banks say all is well. they wouldn't lie.

buckstopshere's picture

More gold buying power for the dollar.

How long will the dollar bubble last?

alexcojones's picture

NY Detective to the Gold Thief: "So why'd you steal that bucket of gold?"

Thief: "It was on my bucket list."

Wonder what that guy is doing tonight.

Hope Hollywood makes a movie about this guy.

buckstopshere's picture

He's probably growing a beard and leaving for Switzerland.

Soul Glow's picture

China is a pussy when it comes to making moves.  Strung out om opium they can't hold anything together.  Jim Willie, Steven Leeb, these guys can rave all they want about Chinese gold holdings and the SDR, but as it stands China has an immense amount of peasants, a real estate bubble, and internal debt as bad as anyone.  When it comes to finance, they are going to collapse with the rest of them.

Theta_Burn's picture

The requested URL cannot be provided

The requested object at the URL:

http://blog.mpettis.com

Detected threat:

object is infected by HEUR:Trojan.Script.Generic

buckstopshere's picture

Interesting.

Pettis criticizes the Chinese economy and the planners and his site gets infected.

His book The Great Rebalancing lays out his thesis. It's quite brilliant.

cat2005's picture

How do you detect those computer threats? Is it an antivirus program or something else?

Soul Glow's picture

I like to focus on who's not buying gold.  Poor chinese?  Not buying gold.  Many Americans who own Mcmansions and SUVs?  Not buying gold.  You know who else isn't buying gold?  

These people - L.A. Car Fight -

https://www.youtube.com/watch?v=lrLIl9Wk230

buckstopshere's picture

Talk to your co-workers and neighbors.

Ask them if they can name any gold coins (e.g., American Gold Eagles or Canadian Gold Maple Leafs) or mining companies or even the spot price of gold in the past three months.

They won't have a clue.

GRDguy's picture

Ignorance is not bliss. Wait until promises made to them are not kept.

Devastated, then educated.  

Hal n back's picture

clarify it--our debt is increasing exponentially now and we still have 13 years of boomers to retire and take soc security and Medicare. We do not have the money for that and the boomers are living longer than the soc sec and medical life expectancies. 

interest rates go up along with 20 tril of debt becoming 25 trillion in 30 months. add another 500 billlion to interest.

whats our choices-

default or inflate.

or we can double our 3 trillion of taxes--how would everybody working enjoy a 16% tax rate for soc sec and medicare plus see their employers pay that tax and then see corp and individual taxes double. 

if you run the numbers , really crunch them, there is no easy way out. tell everybody to go pound sand, or double their taxes-

 

 wonder what everybody will say next march when there is a govt shutdown because for the first time the increased debt last fiscal year of 1.43 trillion becomes a talking point.

 

 

Rage Against Your Face's picture

Most British people know about gold sovereigns, however they would only value them at £20.

the.ghost.of.22wmr's picture
the.ghost.of.22wmr (not verified) Soul Glow Dec 1, 2016 6:52 AM

I'm proud to be an Americans, where at least I know I'm free.

MFL5591's picture

Better get rid of that cell phone!

SubjectivObject's picture

I leave mine at home.

Remember when your phone was at home, or in the office?

DirkDiggler11's picture

Now how dem Hood Rats afford BMW SUV's ? I guess hair weave and extensions really pays off.

Mahatma Coat's picture

Pettis is worth reading, but his site is absolutely compromised like everything online in China.  Batten down your computer's hatches before visiting.

Muad'Grumps's picture

But they can devalue against gold. This move has been in the making for decades. 

NoWayJose's picture

I could see gold under pressure until after the employment report on Friday. I expect it to be good (a parting gift for Obama), which will kick off more selling. That should be a good time to buy, as shorts will likely cover going into the Italian vote this weekend - which looks bad for Italian banks right now. Nothing like an EU/ECB collapse to help gold.

But I will keep some spare cash to buy near the Fed meeting - which I think will underwhelm due to strong dovish commentary.

cat2005's picture

I thought China was poking and prodding its citizens to buy more gold. Now this?

If China and India both reduce or stop gold imports then the global gold price will crash while the local (i.e., India, China) price will soar.

rex-lacrymarum's picture

Their local price premiums may well increase, but the amount of gold imported by China and India is essentially meaningless for the global gold price. Even those who don't understand gold market fundamentals should have noticed this by now, based on the experience of recent years alone. Or did you see the global gold price rally when China's imports made one record high after another between 2011 and 2015?

The reality is that these imports represent a tiny percentage of total gold demand. India's total annual imports (when they are near their historic record highs) represent at most 0.38% p.a. of overall global gold demand and supply. This is basically a rounding error.

Let us consider another currency  for comparison, the US dollar. As of October, the increase in the true dollar money supply amounted to 11.2% y/y. Did the dollar decline? In order to boost the global supply of gold by a similar percentage, mine production would have to surge from its current 3,000 tons p.a. to approx. 24,000 tons p.a. 

dogsandhoney2's picture

only institutional money can catch these overnight swings.

gold will bounce at 1050.

for all traders in hong kong.

Yen Cross's picture

  It's a good thing my gold is physical. No margin calls for me.

 I'm going to stack some more here pretty soon.

Soul Glow's picture

I bought a ten ounce bar today.  My idea of a good time!

Steaming_Pile's picture

I picked up an ounce on ebay on cyber monday.  Only 24kt Maple Leafs for me, no 22kt Americunt eagles.