China Imports More Gold From Hong Kong In Five Months Than All Of UK's Combined Gold Holdings

Tyler Durden's picture

There are those who say gold may go to $10,000 or to $0, or somewhere in between; in a different universe, they would be the people furiously staring at the trees. For a quick look at the forest, we suggest readers have a glance at the chart below. It shows that just in the first five months of 2012 alone, China has imported more gold, a total of 315 tons, than all the official gold holdings of the UK, at 310.3 according to the WGC/IMF (a country which infamously sold 400 tons of gold by Gordon Brown at ~$275/ounce).

As for the UK (from the WGC):

From Bloomberg:

In May, imports by China from Hong Kong jumped sixfold to 75,635.7 kilograms (75.6 metric tons) from a year earlier, Hong Kong government data showed. The nation “remains the most important player on the global gold market,” Commerzbank AG said in a report. The dollar fell from a five-week high against a basket of currencies, boosting the appeal of the metal as an alternative investment.

 

“Higher physical demand in China is good news for the market,” Sterling Smith, a commodity analyst at Citigroup Inc.’s institutional client group in Chicago, said in a telephone interview. “The mildly weak dollar is also positive.”

 

The World Gold Council has forecast that China will top India this year as the world’s largest consumer because rising incomes will bolster demand.

And those looking at the trees will still intone "but, but, gold is under $1,600" - yes it is. And count your lucky stars. Because while all of the above is happening, Iran and Turkey have quietly started unwinding the petrodollar hegemony. From the FT:

According to data released by the Turkish Statistical Institute (TurkStat), Turkey’s trade with Iran in May rose a whopping 513.2 per cent to hit $1.7bn. Of this, gold exports to its eastern neighbour accounted for the bulk of the increase. Nearly $1.4bn worth of gold was exported to Iran, accounting for 84 per cent of Turkey’s trade with the country.

 

So what’s going on?

 

In a nutshell – sanctions and oil.

 

With Tehran struggling to repatriate the hard currency it earns from crude oil exports – its main foreign currency earner and the economic lifeblood of the country - Iran has began accepting alternative means of payments – including gold, renminbi and rupees, for oil in an attempt to skirt international sanctions and pay for its  soaring food costs.

 

“Iran is very keen to increase the share of gold in its total reserves,” says Gokhan Aksu, vice chairman of Istanbul Gold Refinery, one of Turkey’s biggest gold firms. “You can always transfer gold into cash without losing value.”

 

Turkey’s gold exports to Iran are part of the picture. As TurkStat itself noted, the gold exports were for “non-monetary purpose exportation”. Translation: they were sent in place of dollars for oil.

 

Iran furnishes about 40 percent of Turkey’s oil, making it the largest single supplier, according to Turkey’s energy ministry. While Turkey has sharply reduced its oil imports from Iran as a result of pressure from the US and the EU, it is unlikely to cut this to zero. The country pays about $6 a barrel less for Iranian oil than Brent crude, according to a recent Goldman Sachs report.

 

According to Ugur Gurses, an economic and financial columnist for the Turkish daily Radikal, Turkey exported 58 tonnes of gold to Iran between March and May this year alone.

And here is the punchline: if Iran is getting gold in exchange for products, that means that someone else is demanding Iran's gold in exchange for other products. But we won't read about it until those "others" decide to issue a press release.

In other words, the anti-dollar trade is now alive and well, and Iran has been happily transacting in a dollar-free vacuum since the March SWIFT embargo. Most likely "buyers" of Iran's gold? The usual suspects of course: China, Russia, (both of whom recently established bilateral trade relations with the country just for that purpose, here and here) and India.

So: is gold fairly valued at $1,000, at $1,600 or at $10,000... Or is that question even relevant any more as the part of the world that is not broke is quietly shifting to its as its default currency?

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walidsassia's picture

and gold is dropping ???

Quintus's picture

When there is 100x more paper fantasy gold being traded (but never physically delivered) than real gold, the price has pretty much nothing to do with physical supply and demand.

The Wall St. and LBMA banks can play their games and set any price they want (A bit like Libor, really) with little or no regard to whether there is any actual metal out there to buy or sell.

Isn't systemic fraud wonderful?

Pladizow's picture

I love Golden Chinese Turkey's!

Precious's picture

During the opium wars, China told Britain, you're only borrowing this gold, okay?  We'll be back for it once we come down.

zaphod's picture

I don't know what everyone is complaining about, the UK's currency is the only one is call the "pound" this obviously means it is backed by something that has real value.

That fact that the central bank with the currency called the "pound" has relatively zero gold/GDP is nothing to pay attention to.

ZerOhead's picture

British currency notes used to be denoted as 'pound sterling' for the nations creditors.

Pretty soon it will be just be 'pound salt'.

ZerOhead's picture

Salt hurts more... no questions please... just trust me.

Atlas Shrugged's picture

I'm in China right now and EVERY BANK sells gold. They always have it displayed in glass cabinets in the corner. They each have around 2 kg on display (on average) and I've been told they have a lot more 'out back'. I make it a habit of asking how popular gold is to customers and the managers confirm that a lot of people are buying.

Black Forest's picture

Ned Naylor-Leyland on CNBC: “Gold May Have Been Manipulated Like Libor”:

http://maxkeiser.com/2012/07/09/ned-naylor-leyland-cnbc-gold-may-have-be...

 

yabyum's picture

Fantasy Gold: I like it! I can almost hear midget tranny porn yelling "Da paper, da paper" and ringing the bell.

Shocker's picture

Those are some pretty insane figures/charts above. So is China importing Gold because of economic / currency problems ahead?

So much going on, in every part of the economy Local and Global.

http://www.dailyjobcuts.com

MachoMan's picture

Our currency or theirs?

Shocker's picture

Not a clue, just import gold has to mean something like that correct?

MachoMan's picture

It was a poor joke...  but, I think it's more of a symptom than preparedness...  I guess everyone could just focus on one particular bubble with the cheap money, but I think the money tends to be distributed a bit better.  In the end, there are carrying costs for jumping on the commodity train...  e.g. deteriorating ghost towns.

Think of it kind of like brewster's millions...

ATM's picture

They're buying gold because what else are they going to do. buy more USTs at 1.5% yield? Buy euros, pounds, or the Swiss?

They're buying gold because they have to. They can only load up on so many resources at one time and gold is the best liquid investment they can make.

AmCockerSpaniel's picture

And why did the chicken cross the road?

youngman's picture

I would add because the WANT to...who would want anymore paper when you see what is coming...it seems though they have picked up the pace quite a bit...so when will the Comex fail....not be able to deliver and metal....and London too....the sale of the London exchange stinks....and there has been very very little dealer movement in the Comex...when does the paper market fail....or will it ever since its just a day trade..

Jungle Jim's picture

"...so when will the Comex fail....not be able to deliver and metal....and London too....the sale of the London exchange stinks....and there has been very very little dealer movement in the Comex...when does the paper market fail....or will it ever since its just a day trade...?"

Yes, when. That's exactly what I'd like to know. It can't happen soon enough for me. I've grown old and lame waiting.

I and I alone know where a fair amount of gold and silver is buried. (There is no map.)

It would be nice if it were suddenly "worth" what it's really worth once again. Right now it's just some stuff under a few feet of dirt and gravel in a lonely place. In a way it's not even worth its weight in paper fiat currency now. I mean, a $100 bill weighs one gram. One gram of gold is only "worth" about $50 now.

 I don't even know what silver goes for per gram. Not much. Hardly worth the trouble and risk of digging up.

Jim

PiratePawpaw's picture

For an ounce of gold I can get a good AR and 2000rds of ammo.

With a good AR and 2000rds of ammo I can protect or acquire alot of ounces of gold.

Just sayin........

Jungle Jim's picture

I already had two (2) ARs (and a number of other rifles and shotguns and handguns, and I don't honestly know how many magazines or how much ammunition, plus various accessories, as well as ballistic helmets, body armor, etc., and also some non-perishable food) before I ever bought my first Mercury dime or my first tenth of an ounce of gold.

The big thing I lack is real estate, especially a place that's both defensible and self-sufficient. I was rather hoping that if gold and silver broke free of the price suppression scheme they might enable me to finally buy a good place. For now I can only dream on. 

midgetrannyporn's picture

Call me out if you like just don't whine about prices like the rest of the goldbugs on here do when it crashes.

metastar's picture

The gold game will continue until ...

   THERE IS A RUN ON THE CENTRAL BANKS BY CENTRAL BANKS.

cowdiddly's picture

or the tons of gold in the twin towers that vaporized

knukles's picture

These fraudsters and manipulators should get caught, tried (as in guilty, heretics) and sentenced in an Islamic court.

Oh, BTW, was that metric about the UK's gold pre or post Brown's sale?
Helluvajob, Brownie

goldm3mb3r's picture

Thanks Gordo, you total penis.

spentCartridge's picture

That miserable Scottish son of a bitch should be castrated and thrown into the Firth of Forth on a cold day.

 

... with the rest of his psychopathic family.

PoorByChoice's picture

I wish posters on this site would stop using the words Gordon and GOLD together.

Your not doing my angina any good at all folks!

 

Wouldn't mind but I never voted for these psychopathic morons and still have to suffer their stupidity.

I'd join in the chorus re drowning in the firth but I have to answer the door now

 oh!

no need, the nice pleecemen have simply kicked it off it's hinges....

Oh Jerusalem

ZeroAvatar's picture

I have that Compact Disc. 'Gordon's Gold'.  OH!  Sorry, PBC!

diogeneslaertius's picture

this is really the fundamental fraud problem

 

whether we are talking about money, securities or any other asset class today, it is the fundamentals debasement, through instruments, programs, and outright chicanery that should concern us most.

 

all other arguments devolve on shit like paper/digital vs physical

jazze's picture

People who are buying paper fantasy gold do not want real physical gold, they want paper fantasy gold exposure. These guys are not demand for physical gold. If they wanted physical gold, the price would rise.

moskov's picture

could you tell me why your avatar is a Chinese flag on a German Flag? what's that representing for?

Manthong's picture

a symbol of all the German manufacturing (and expertise)  that is now in and owned by China?

Gavrikon's picture

I dunno, but there's sure a hell of alot of those little yellow guys running around in Frankfurt.  I can'y spit out my 6th floor window without hitting one on the sidewalk below.

HungrySeagull's picture

Oh Really?

It's the Steel or Property they must be after.

Steel would be my guess, if getting ready for war... that Krupp will come in REAL handy.

francis_sawyer's picture

They're just there for the 'Love Parade'...

OhOh's picture

BRICS + GERMANY = Strength

Citxmech's picture

The fact that paper gold can depress the price of physical is a given - what baffles me is that the premiums over spot for physical are not climbing.  One would think that in a supposedly tight market for deliverable metal we'd see a decoupling from the paper price signaled by dramatically increasing premiums. . .

HungrySeagull's picture

It aint tight yet.

The only time gets tight is when the Bullion Sources put "Limited stock" or ration the physical.

Then everyone buys hand over fist.

Citxmech's picture

That's the only explanation that makes sense.  Even if one believes the published numbers regarding world-wide gold stock-piling (I assume that stealth accumulation is rampant as well) one has to think that we'll reach that point of tightening sometime in the very near future. .

Its_the_economy_stupid's picture

Gold premiums aren't rising, but silver eagle premiums are up 25% from 1 year ago

HungrySeagull's picture

The Premiums stayed the same at my vendor, however the delivery prices charged jumped three to 4 times what it was before.

It's easier to get it off the bay with free delivery and cheaper too if you are careful.

MunX's picture

But banks leveraged 100 to 1 allow them more access to capitol to give loans to students and stuff. Bankers are our friends.

Stuart's picture

It's the mining companies that are the greater fools.   They have to be a special bread of patsies to go along with the comex price, london price or the spot price anywhere.   They're like sheep.  Why don't they just stand up for their industry and refuse to sell at these prices.   Above basic cashflow reqmnts, don't sell any gold at this price, just stockpile it.   More need to do this.   

Bastiat's picture

Miners who finance through debt are almost always forced to hedge or sell production forward. ABX took it a step beyond that in the 90s or early 00's and essentially became more of a hedge fund, as Fekete called it.