China's Gold Imports From Hong Kong Surge to Highest Ever? - PBOC Buying?

Tyler Durden's picture

Submitted by GoldCore

China's Gold Imports From Hong Kong Surge to Highest Ever‎ - PBOC Buying?

Gold’s London AM fix this morning was USD 1,641.00, GBP 1,063.51, and EUR 1,286.25 per ounce.

Yesterday's AM fix was USD 1,627.00, GBP 1,051.91, and EUR 1,271.49 per ounce.


Cross Currency Table

Demand for gold bullion in China continues to surge.

Mainland China's imports from Hong Kong surged to 102,779kg/oz from 86,299kg/oz in October. This is a 20% increase from the already high number seen in October and a 483% y/y increase.

The run into Chinese Lunar New Year has again seen higher than expected Chinese demand for gold and China's voracious appetite for gold is surprising even analysts who are positive about gold.

As Chinese people's disposable incomes gain and concerns grow over inflation and equity and property markets, Chinese consumers and investors are turning to gold as a long term investment hedge.

There is informed speculation that commercial Chinese banks may have taken advantage of the recent price dip to build stocks of coins and bars and accumulate bullion.

China's demand for physical gold bullion has rocketed past India with the country now overtaking India in the third quarter as the largest gold jewellery market according to the World Gold Council.

There is also informed speculation that some of the buying was from the People's Bank of China with one analyst telling Bloomberg that “there is always the possibility that some purchases were made by the central bank.”

As we've stated in the past, the PBOC is gradually diversifying their huge FX reserves and likely will announce upward revision of total gold reserves again in the coming months. Whether official buying is responsible for the huge surge in gold imports from Hong Kong is more difficult to ascertain The Chinese Central Bank does not release their figures on gold purchases.

As of June, 30, 2009, they held 33.59 million ounces or 1,054 tons. This is the 5th largest holding by country but some officials are on record with regard to Chinese aspirations to hold as much gold as the Federal Reserve's 8,100 tonnes of gold reserves.

What is particularly bullish about the import data is that there is a ban on exporting gold from China so gold bullion is in strong hands in China.

Platinum group metals rose a third straight day due to concerns on supply disruption in South Africa, as the national grid warned about extremely tight power supply in January.  The gold-platinum spread narrowed to just below $165 an ounce, its smallest in two weeks. The price of platinum has been lower than that of gold since September 2011, as gloomy economic outlook dampened sentiment on platinum, while gold's safe-haven appeal helped limit its price decline.


Gold Spot $/oz - 5 Days

Finally, markets were looking forward to a meeting between German Chancellor Angela Merkel and Italian Prime Minister Mario Monti later in the day in Berlin, while IMF's Christine Lagarde, is to meet French President Nicolas Sarkozy in Paris. Markets are also watching Spain and Italy’s plan to sell as much as EUR17 billion in debt on Thursday and Friday respectively.

The continuation of the eurozone crisis and risk of global financial contagion will continue to support gold's safe haven status.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS
(Reuters)
Gold edges up as Europe uncertainty supports

(TheStreet)
Gold Prices Reclaim Their Luster

(CoinNews)
Gold Prices Advance $23, Silver Eagle Sales Top 4.2 Million

COMMENTARY
(The Telegraph)
Can the Euro Survive Another Year?

(SkyNews)
Will The ECB's Stealth QE Programme Save The Euro?

(SilverSeek)
Three Elements of Manipulation

(Mineweb) 
More banks in India to import gold, silver

(ZeroHedge)
Was 2011 A Dud Or A Springboard For Gold?

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Temporalist's picture

No that's all wrong gold is tanking says MSNBC, FOX and Bloomberg.  It must be Soros and Paulson selling.  Nobody likes gold especially when the world is so stable.

Pladizow's picture

Gold = 70% of US & Western Foreign reserves

Gold = 1.6% of China's.

So with China buying and P.A.G.E set to open in June, where's the pysical price going?

Plus there are atlest another dozen incredibly strong fundamental reasons to buy, while the ignorant MSM keeps repeating its in a bubble.

Badabing's picture

”No that's all wrong gold is tanking says MSNBC, FOX and Bloomberg.  It must be Soros and Paulson selling.  Nobody likes gold especially when the world is so stable.”

 

This is the way the spin doctors tell us its time to buy!

Turd Ferguson's picture

Whatever happened to Johnny Bravo?

tmosley's picture

I would bet he came back as RNR, and his descendent troll identities.

Mr Lennon Hendrix's picture

I don't know.  Bravo may have had a mean streak, but he didn't seem bitter.  Sometimes I could tell he was listening.  And he wanted to understand more than anything.  And make money.  That was the feeling I got.

I've always thought Dabolina was Bravo, but the other day he said he was from a different State.  They write similarly and have similar aspirations.

Temporalist's picture

I found Johnny Bravo in Hong Kong:

 

Cage dogs of Hong Kong: The tragedy of tens of thousands living in 6ft by 2ft rabbit hutches - in a city with more Louis Vuitton shops than Paris

 

"These pictures by British photographer Brian Cassey capture the misery of people - some estimates put the figure as high as 100,000 - who are forced to live in cages measuring just 6ft by 2 1/2ft."

http://www.dailymail.co.uk/news/article-2084971/Hong-Kongs-cage-homes-Tens-thousands-living-6ft-2ft-rabbit-hutches.html

 

 

fourchan's picture

LETS all hope they dont see the real value pm, silver.

mrgneiss's picture

He promised never to come back on Zero Hedge if gold ever hit $1450, some think he had to leave the country after getting a margin call on his often touted gold short.

Chump's picture

Yeah right, no one would give that 20 year old dork an options account!

xela2200's picture

So it is PAGE finally opening? I thought the BOC didn't like the competition.

tekhneek's picture

"Non-government run competition."*

Campagnolo's picture

Chinese and Indians are buying at this right levels, they are no fools and won't wait for the 1400s, low 20 levels (that many are screaming out there) , no sir!. We may never see those prices again on our lifetime, instead we will see 2500 for gold and Silver, well, silver could start one of the greatest rallies. we are looking at the potential for the LARGEST TRIPLE-TOP BREAKOUT OF ALL TIME!, targeting   $80-$120 US confetti. 

Vlad Tepid's picture

China seems to know which way the winds bloweth.

GeneMarchbanks's picture

Rinse. Repeat. Once you start buying, you don't stop.

Darth Silver's picture

Funny but true. Once people understand what money is they realize how scared shitless they should be to have excess cash in anything other than gold and silver. Tick tick tick. Coming soon to a lbma vault near you: Delivery, starring Ned Beatty. And yes there will be squealling

dereksatkinson's picture

This doesn't include the gold they are buying directly from the mines within their own country either.  They aren't letting gold leave their country either.

Temporalist's picture

Try reading next time "What is particularly bullish about the import data is that there is a ban on exporting gold from China so gold bullion is in strong hands in China."

Just Observing's picture

Yep.....heard some clown on CNBC this morning saying "we don't recommend gold to our clients....we can't see what the value is in it".....and I thought "Yep.....you beat your clients out of 10% last year, and 20+  the previous year, and how much over the last decade ? "

SheepDog-One's picture

Just another used stock salesman, trying to convince that stocks are where the real 'value' is. Of course thats ridiculous, in real terms stocks havent been axle deep stuck in the mud for over a decade. Gold is up from the $200's in late 90's x8 gain.

No 'value' in gold? Well I'd beg to disagree with him. How many stocks have gone to zero? Hundreds, thousands. 

How many times has gold gone to zero? Never.

Bindar Dundat's picture

Truth is you need balance. Cash gold and a few solid equities to feel safe in todays world. I have been lowering my cash and increasing my gold positions gradually over the last six months and I sleep well at night but gold may not be the end all if the real shit hits the fan and big brother comes to the game with guns. I like this little story and suggest you read it.

 

http://www.larryobrien.net/my-worst-fear/

LawsofPhysics's picture

Same as it ever was.  Those who pursue purchasing power and a stronger voice, and simply more POWER in general, are pursuing and purchasing GOLD.  It has been so for thousands of years.

RobotTrader's picture

China is buying way more Treasuries than gold.

Here we go again.

ES and EUR/USD sell off, gold goes down with it....

Ergo: Instantaneous, immediate, and urgent buying of "Uncle Gorilla" Paper commences.

Treasuries on the verge of another huge break out?

http://finviz.com/fut_chart.ashx?t=ZB&cot=002602&p=d1

 

Pladizow's picture

"China is buying way more Treasuries than gold."

3 Questions:

1.Which is more scarce?

2. Which is not a figment of the imagination?

3. And which is in the bubble?

mrgneiss's picture

Of course China is buying more treasuries than gold.  US $100 billion is about 2000 tons of gold at current prices, 80% of total world annual gold production.  It doesn't take a genuis to figure out if China was to significantly switch from treasuries to gold, gold would be in the 5 digit range within a couple of months.

They are trying to buy as much gold as possible without significantly moving the market, and also trying to spend their soon to be worthless US dollars on other natural resource plays around the world.

I'm sure an astute trader like yourself has heard of the China gold put.

Eally Ucked's picture

Yes, of course but who buys them? Banks and FED? We have good example of european banks and ECB saturated in soverign debt paper and when the time comes we will be in the same situation.

SheepDog-One's picture

RoboTarder never met a bubble he didnt leg-hump black and blue. And he's now also turned outright liar, China data shows theyre selling UST's.

 

tmosley's picture

China is selling treasuries, dumbass.

LawsofPhysics's picture

Come on tom, don't feed the trolls.

tmosley's picture

How else are we supposed to lead them to the slaughter?

PaperWillBurn's picture

If they didn't buy treasuries they would not be able to purchase this much gold. The price would already be much higher. They buy because they must buy if they want to rise.

 

SheepDog-One's picture

Its not so much China wants gold to rise, theyre just preparing for the dollars demise.

_underscore's picture

"China is buying way more Treasuries thna gold"

Eh?

What do you think the value of the Treasuries that China already holds if that (i.e. China bought more gold than Treasuries) were reversed?

Wouldn't that so spook the markets (well, everyone actually..) that the USD & collateral denominated in USD would plummet in value & gold would soar?

Even the merest sniff that China was divesting itself (or at least hedging against..) of USD assets would make those asset values nugatory & China wouldn't be

able to buy gold relatively cheap, as it does now.

 

 

I did think you spoke a good contrarian (for ZH at least) spiel RT, so always paid  a bit of heed to you, (as it's never good to just listen to opinions converging with one's own)

but I've revised your rating to Bbb now, next stop junk.. - sorry!

 

 

 

TGR's picture

Hong Kong is the perfect conduit for the flow of gold into the mainland: 17% VAT on physical in the mainland, 0% VAT on gold in Hong Kong, so the inbound flow of physical will only continue.

achmachat's picture

are you SURE about that?

I buy gold in China for just a bit over spot (at the agricultural bank of china). where do those 17% fit in?

edit: real physical bullion. not some kind of gold account.

TGR's picture

Yep. ICBC physical bullion in hand - 'price' is slightly over spot plus 17% VAT.

All bullion dealers in China must charge the 17% VAT by law.

The only way to skirt the 17% VAT is to stand for delivery in the Shanghai Gold Exchange, hold 'physical' in one of the key banks by way of an unallocated account backed by physical (but not redeemable in physical). or buy via HK.i

ABC would be no different - you could call them tomorrow morning to confirm...I would be checking your invoices from ABC...do you read Chinese? Check your exchange rates too.

 

 

achmachat's picture

they have their "fees" (per gram and transaction) but even on their site they don't mention taxes:

http://www.abchina.com/en/wealth-management/gold/ppgt/

 

edit: also all the pretty gold shops all over china that sell gold coins, bars and jewellery according to their daily price per gram, have a price which is under spot + 17%. And there is no additional tax on those purchases either.

TGR's picture

How long have you been in China? Noone, ever, anywhere, on any product, mentions taxes. Its just a given, in-built, or tacked onto the invoice.

When I've bought from ICBC, they never at any point mention taxes. Its a given on the invoice, no alternatives. The bullion dealers all quote the RMB spot price as the going price...all of them...but have you ever gone through with a purchase? Doesn't sound like it, as the invoice must, by law, have the 17% factored in. Can't escape it.

TGR's picture

I have bought physical on occassion here too, BTW, though it's not a wise or preffered route  given the uneccessary VAT and paperwork needed to exit stage left out of China.

I can see there are doubters re the VAT, don't know why, but check out the slides from a LMBA conference in May from Deloitte for confirmation. http://www.lbma.org.uk/assets/LBMABMF2011_S2_02Chin_en.pdf

achmachat's picture

thanks. will have a look.

(this summer I bought gold coins at a branch of ABC in Liaoning as a gift for family members there, and I really really don't remember that they added VAT)

 

your slides specify that it applies to "standard" gold (with the lowest one being 50grams). Could it be that those 10gram coins simply are not official "standard" gold bullion and thus exempt from VAT?

TGR's picture

Possibly, but unlikely: standard gold is defined as AU9999, AU9995, AU999 and AU995 , and I know the VAT applies to all gold jewelry as well, irrespective of weight.

Given their weight specifications to define standard gold, you may be right. But at the same time, I know the bullion dealers still have to charge VAT on bars that are not defined within those six weight divisions too. I doubt you could get 9999 coins at spot, while 50gram and 100gram bars carried 17% VAT. That would make for a massively lopsided demand, given there would be zero incentive to ever buy a gold bar from the banks or dealers when you can get 9999 coins at spot. Will look into it. I hope you are right.

Oh regional Indian's picture

Have to disagree with a few posters above, LOP?

Gold has been the substance of abject greed amongst the rich and powerful for millenia. It has never been people's money, not even when it backed so called currency. As if currency was ever a limiting factor in whatever nefarious things a giovernment wanted to do.

Midas's tale is cautiionary for good reason. Like the sun, gold blinds. But like a full moon on a clear night, silver illuminates.

And even though this sounds broken recordish, 3-4-5 6.... all olympic swimming pool theories are bogus. Ever mined. What a load of shit. Like saying three jupiter sized baskets of apples have grown on earth since the first one.

goLd.... even th eword itself is loaded with import of a not good kind.

And then there was Yamashittalotta gold, phillipines, Japanese royal treasure.... on and on.

Careful.

And gold is heavily tainted with drugs. Just like diamonds.

ori

/an-opportunity-and-a-golden-warning/

francis_sawyer's picture

I tried to focus in on the "BLAH BLAH BLAH" part, but it was punctuated poorly...