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. 

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.

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.

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.

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.

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.

Cherubim's picture

Be sure and put it in a hard case. Those gold Maple Leafs scratch easily.

Yen Cross's picture

  That's awesome! Good for you.  Paper gold could go to zero, be we all know the value of real gold.

   This is a great place to lower your average buyin costs. What's funny is that $usd was sinking all through Asia session then gold snapped lower and bounced.

  It gives us some insight to how much influence China has over the price. I also wouldn't put gold in the industrial metals basket. ;-)

  Keep stacking.

Snaffew's picture

I'll give you $1 million zimbabwean dollars for it.

Snaffew's picture

nice...i never buy anything on margin anymore---got absolutely killed leveraged 400 percent back when the dot com bubble popped.  No hedges or protection...actually owed 80k to e*trade.  Haven't done a single margin trade in 15 years...but it was fun swinging with a couple mill of buying power.

Hongcha's picture

Head & Shoulders on the GLD, the SLV and the GDX breached or about to be.  Saving powder in case it's beaten back down to AISC, then I will buy physical.  God only knows what's coming next, I mean who honestly has a clue.  Who has been right on anything in the last 12 months, anywhere?

cat2005's picture

What does all that trader talk mean in simple English?

Conax's picture

Gold imports are hardly a sign of capital flight, more like capital conversion.
They should be proud and tell them to go for it all.

jomama's picture

Might as well leave all those shinies at the bottom of the lake for your great grandchildren and buy some bonds instead.

quasi_verbatim's picture

Gives a whole new meaning to bucket shop. What to doooo? Bury it or fence it at 10c to the dollar? Can't spend it on Big Macs. Staying alive is the name of his game.

 

Stackers should watch this guy for when legal hoarding becomes illegal.

zipit's picture

Bullish for Bitcoin.

Anopheles's picture

The vast majority of worldwide bitcoin trades are in China. 

What do you think will happen if China cracks down on bitcoin?  As it is, banks in China aren't allowed to own or trade bitcoin. 

sinbad2's picture

So replace worthless paper money, with worthless digital money, sounds like a winner.

indygo55's picture

Have you ever tried to take one bitcoin and put it on a thumb drive and move it to another PC? Its not as easy as it seems and as it should be. Its a total hassle. And if the power goes out? Then what? 

JustUsChickensHere's picture

What? You do not move Bitcoin - they are out in the ledger (blockchain), not on your PC. What you have is the private key to manage them. No need to put it on a USB stick...  write it down  - it is just a sequence of numbers and letters.

Use it with any wallet you like any anywhere in the world. The function is 'import private key' .... then use the wallet to spend. Notice I did not mention location, technology or even electicity for recording the private key. A pen and paper will do. Hell - chisel the key instone if you want.

 

Shlomo Schwartzman's picture
Shlomo Schwartzman (not verified) Dec 1, 2016 1:47 AM

Oh so another 2000 years til GLD reaches inevitable entropy.  Thanx!

radbug's picture

Beijing wants the RMB to supercede the $US, but you can't replace one fiat currency with another fiat currency.

MoreMises's picture

When the gold price falls, the "scary" rumours rise...Next one will be "Owning gold causes cancer"

sinbad2's picture

Don't forget that China is the worlds largest gold producer, 450 tons a year out of a total global production of 3000 tons.

So exactly how much of the global gold production is China buying up?