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Gold Bar Demand in China Surged 51% to 213.9 Tons In 2011

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From GoldCore

Gold Bar Demand in China Surged 51% to 213.9 Tons In 2011

Gold’s London AM fix this morning was USD 1,579.00, EUR 1,255.67, and GBP 1,006.63 per ounce. Friday's AM fix was USD 1,560.50, EUR 1,240.66, and GBP 996.04 per ounce.

Silver is trading at $28.65/oz, €22.86/oz and £18.33/oz. Platinum is trading at $1,442.50/oz, palladium at $592.60/oz and rhodium at $1,275/oz.

Gold rose $13.30 or 0.85% in New York on Friday and closed at $1,572.80/oz. The higher close Friday was not enough to prevent a lower week for gold which was down 1.2% for the week.

Asian trading started out flat and then gold climbed to about $1,583/oz and pulled back a bit and is now trading in Europe near $1,580/oz.  US markets are closed for Memorial Day today which means that volumes may be low and illiquidity could result in sharp price movements.


Cross Currency Table – (Bloomberg)

Gold is higher in all currencies today as some buyers view the recent price falls as overdone and are buying the dip. There is some relief that Greek opinion polls showed pro bailout conservatives in the lead for elections. This has alleviated fears of a disastrous Greek exit from the euro, but uncertainty still remains and ‘Grexit’ remains likely.

The risk of contagion in the Eurozone appears to increase by the day as the news from Spain shows that it is following fast in the footsteps of Greece and this will support gold. Bank runs in Greece and the risk of bank runs in Spain and elsewhere are a scenario which could lead to contagion.

As long as the short term panacea of using quantitative easing, the modern euphemism for the creation of trillion of units of currency (dollars, euros, pounds etc) is embraced by global policy makers – gold’s bull market is assured.

The day or reckoning has been postponed for now but economic recovery is not coming and indeed there is now the real risk of a global recession and even a  global Depression – especially if there are widespread global electronic bank runs.

While gold and silver fell marginally last week, the very large weekly returns in the gold mining sector may signal we are close to a bottom. The XAU and HUI gold mining indices rose 6.8% and 7.9% respectively. Strong gains in the XAU and HUI have often preceded market bottoms for gold and silver.

This week investors will look to China’s PMI and US non-farm payrolls to gauge the health of the world’s two largest economies. 


XAU/USD Currency Chart – (Bloomberg)

A reminder of the sharp increase in demand for gold and silver, particularly store of wealth demand, in recent years was seen in the figures released by the China Nonferrous Metals Industry Association in Shanghai today.

China’s gold consumption rose 33% to 761 tons in 2011 and China’s silver consumption rose 6.8% to 6,088 tons last year.

China’s gold consumption rose 190 metric tons last year to 761 tons, Wang Shengbin, China Gold Association Vice Chairman, said in a speech in Shanghai as reported by Bloomberg.

China’s jewelry consumption jumped 28 % to 456.7 tons last year, gold bar consumption surged 51% to 213.9 tons and gold coin consumption gained 25% to 20.8 tons, Wang said

China’s silver consumption, including industrial use, jewelry and coins, rose 6.8% to 6,088 metric tons last year, the vice chairman said. The amount shows a surplus given China’s output of 12,348 tons last year, which gained 6.3%, Wang said.

 

OTHER NEWS
(Bloomberg) -- Gold Traders Increase Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended May 22, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 115,151 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 1,009 contracts, or 1 percent, from a week earlier. 

Gold futures fell this week, dropping 1.4 percent to $1,571.20 a troy ounce at today's close. 

Miners, producers, jewelers and other commercial users were net-short 135,598 contracts, down 3,319 contracts, or 2 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) -- Silver Traders Trim Bets on Price Rise, CFTC Data Shows 
Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures in the week ended May 22, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 10,797 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 677 contracts, or 6 percent, from a week earlier. 

Silver futures fell this week, dropping 1.1 percent to $28.39 a troy ounce at today's close. 

Miners, producers, jewelers and other commercial users were net-short 15,222 contracts, down 686 contracts, or 4 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,664 Metric Tons
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,664.30 metric tons as of May 25, according to figures on the company’s website.

================================================================================

                               May 25        May 24        May 23      May 22     May 21      May 18

                                2012          2012             2012         2012          2012        2012

================================================================================

Million Ounces     310.714    310.714    310.229    310.229    310.229   310.229

 Daily change            0              485,182          0              0                0            4,269,979

--------------------------------------------------------------------------------

Metric tons                9,664.30   9,664.30   9,649.21   9,649.21   9,649.21  9,649.21

 Daily change              0.00         15.09            0.00           0.00           0.00         132.81

================================================================================

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

NEWS
Gold Extends Advance As Wen Comment Boosts Stocks - Bloomberg

Gold firms on euro rebound; Europe worries linger - Reuters

Gold holds ground, underpinned by steady euro - Reuters

Gold edges up as Greek exit fears ease - MarketWatch

COMMENTARY
Will Gold Fall All the Way with the Euro? - GoldSeek

Complete European Calendar Of Events: May – July – Zero Hedge

Silver: Illegalities - Jesse's Café Américain

Are The Europeans About To Start The Second Half Of Our Great Depression? – Zero Hedge

Detroit Goes Dark: Half of Detroit's Street Lights May Go Out To Save Money; Left to Rats – Mish’s Global Economic Trend Analysis

Europe's Maquina Infernal has crippled Spain – The Telegraph

 

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Mon, 05/28/2012 - 07:50 | 2468756 BorisTheBlade
BorisTheBlade's picture

Populations are racing into gold as currencies are racing to the bottom.

Mon, 05/28/2012 - 07:58 | 2468766 Al Gorerhythm
Al Gorerhythm's picture

Cue the smackdown.

Mon, 05/28/2012 - 08:03 | 2468778 markmotive
markmotive's picture

All hail our new overlords.

Mon, 05/28/2012 - 08:07 | 2468787 Al Gorerhythm
Al Gorerhythm's picture

Three cheers for the Enlightened Despots out there.

Mon, 05/28/2012 - 08:48 | 2468873 Harlequin001
Harlequin001's picture

Ah well, that explains it. No wonder the gold price is plunging, everyone's buying.

Simple... and glaringly obvious...  ?

 

Mon, 05/28/2012 - 11:36 | 2469331 Rahm
Rahm's picture

In unrelated news, Chinese demand for sewing has reached an all time high.

Mon, 05/28/2012 - 12:42 | 2469524 WmMcK
WmMcK's picture

Ah sew -- long hems.

Tue, 05/29/2012 - 15:19 | 2473004 ilion
ilion's picture

The CEO of Armada Markets (www.armadamarkets.com) told in a seminar last week here in Singapore that ultimately there is going to be a divergence in price between physical gold and paper gold which could provide a nice almost zero risk spread trading opportunity.

Mon, 05/28/2012 - 07:57 | 2468767 Motorhead
Motorhead's picture

Gold and gold charts, bitchez!

Mon, 05/28/2012 - 08:11 | 2468768 JustObserving
JustObserving's picture

213.9 tons of gold bars are worth $10.7 billion.  That number is trivial compared to the real estate in China (less than 0.01%).  Just land  was worth about $20 trillion in Beijing alone on January 2011.  More of that real estate wealth will find its way to gold as people diversify and confidence in fiat currencies falters.

The fed has already announced that it will backstop the exchanges and the CME group - it had probably little to do with wheat prices, or the price of tea in China.

 

Mon, 05/28/2012 - 12:40 | 2469517 WmMcK
WmMcK's picture

Long gold to the price of rice in China.

Mon, 05/28/2012 - 08:00 | 2468772 Peter Pan
Peter Pan's picture

95% of the world is broke and will remain broke regardless of which strategies world governments adopt in trying to reverse the present economic problems.

The majority of people do not understand what is going on in markets and this is what is holding back the demand for gold. If people really appreciated the depth of the present problems they would be buying gold hand over fist.

Gold may not sky rocket in dollar value but it sure will retain value compared to government bonds and houses.

Mon, 05/28/2012 - 17:22 | 2470140 Xkwisetly Paneful
Xkwisetly Paneful's picture

Would that be the 95% of the world that is broke that is buying hand over fist?

gmafba there is nothing other than hopium to suggest anything but the direct opposite,

that gold is overweighted in the avg idiot's portfolio.

Mon, 05/28/2012 - 08:04 | 2468780 No Euros please...
No Euros please we're British's picture

If China is hoarding physical, sounds bullish for paper derivatives, right?

Mon, 05/28/2012 - 08:09 | 2468789 kensdad
kensdad's picture

If it were just announced that China had bought 33 pct less than last year, then gold would be down $40 or more.  As it is, gold is up an odd lot...

Mon, 05/28/2012 - 08:49 | 2468880 Al Gorerhythm
Al Gorerhythm's picture

Fucking hoarders. I heard that they're hoarding US dollars too, and speculating.

Mon, 05/28/2012 - 09:14 | 2468967 Divine Wind
Divine Wind's picture

No shit Al. Right there with ya. Damn Chins eatin up Au and Ag, rare earth minerals and a whole mess of concrete. Greedy SOBs.

With this global downturn, everyone needs a fair shot and level playing field.

And where be my Gold EBT?

Mon, 05/28/2012 - 12:41 | 2469522 tonyw
tonyw's picture

I prepare prudently, you stock up, they hoard criminally.

I am firm, you are stubborn, he is is pigheaded

I'm a freedom-fighter, you're a rebel, he's a terrorist.

 

Mon, 05/28/2012 - 09:13 | 2468934 AmCockerSpaniel
AmCockerSpaniel's picture

Paper and physical do NOT have to move together, and with the great manipulation of paper via shorting, has not. Recall that Obama told the fed to be ready to backstop the paper. This means that the paper does not have to be paid in physical, and shorting as much as the TBTF's do will be paid by the Fed printing still more free money. I don't think all the buying by China will move the paper market much. When Obama orders the confiscation of the physical the government will not pay what Gold and Silver are really worth (they will use the paper market price as what Gold is worth). Do not put your physical in a safety deposit box, if you want to be able to get it when Obama comes looking.

Mon, 05/28/2012 - 09:21 | 2468986 Divine Wind
Divine Wind's picture

SCROTUS the POTUS will raid the ETFs and hedge funds for their gold. Few Americans still own any gold. They sold most of it off at the neighborhood gold parties back in 2009 and 2010 when the media told everyone the bull had run its course.

Anyone else still holding gold likely has the ability to defend it and would never give it up to a smooth talker in a nice suit.

Then again, reality is something you watch on television.

Mon, 05/28/2012 - 18:15 | 2470228 Overfed
Overfed's picture

Again, when dealing with agents of the gov't, if you can't STFU, then at least lie like a rug.

Mon, 05/28/2012 - 11:30 | 2469319 beaker
beaker's picture

Is there a pairs trade in long physical etf like PHYS/short GLD?  I don't know, just wondering if anyone has ever looked at this spread?

Mon, 05/28/2012 - 13:30 | 2469632 Silversinner
Silversinner's picture

My personel pair trade is PHYS GOLD/PYS SILVER,what a nice

pair they make.Put my money in gold or silver subtitudes and

support the paper sceme;never ever.Keeping my metals for

after the paper ponzi collapse and yes I am looking forward

with great joy towards the day this corrupt,dishonest and evil

system will indeed be distroyed.

Power to the people,honest money and freedom.

 

Mon, 05/28/2012 - 15:19 | 2469925 WmMcK
WmMcK's picture

+ Pt and Pd -- forex with 4 crosses.

Mon, 05/28/2012 - 17:58 | 2470200 theprofromdover
theprofromdover's picture

So with all this strong & increasing demand for gold, how have they managed to drag the price down 20% in 9 months?

Some huge co-ordinated effort indeed; and they think they can break the flight to PMs? Desperate fools.

Tue, 05/29/2012 - 18:50 | 2473659 steveo77
steveo77's picture

This is a continued correction after a mini-mania,   weak hands are letting go.   Like getting rid of a '66 Mustang....weak hands always have regrets and stories.   Strong hand have conviction and wealth.

Wed, 05/30/2012 - 07:59 | 2474754 boa74520
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