"Uncivilized" China Quietly Building Gold Reserves As Gold Imports From HK Soar By 587% In First Quarter

Tyler Durden's picture


A month ago we ended up with the hilarious situation where the US was actively considering releasing petroleum from the Strategic Petroleum Reserve even as China was demonstratively and concurrently adding to its strategic inventory. Now, as the developed world is seeing day after day of gold hammering on amusing flights of fancy that central banks won't be forced to engage in more and ever bigger rounds of monetary dilution, and where the seller apparently has no regard for getting a "good" price, but merely seeks to crash the bid stack slams various PM prices, we see the same inversion with gold. Because as Bloomberg reports, "Mainland China's gold imports from Hong Kong surged more than sixfold in the first quarter, to 156 metric tons, adding to signs that the country may displace India as the world's largest consumer of the precious metal on an annual basis." And the punchline: "The purchases through Hong Kong may signal that the mainland is accumulating reserves, London-based brokerage Sharps Pixley Ltd. said in February. The nation last made its reserves known more than two years ago, stating them at 1,054 tons." Yep ladies and gents: the PBOC is very grateful that it can add hundreds of tons of gold to its reserve holdings in a stealthy operation which it will announce only after its conclusion, at which point, like true 13F chasing lemmings, retail will send gold soaring. But in the meantime, dear hedge funds worried about your margin calls and 1 month performance reports, please proceed calmly along with the lemming herd, and keep pushing gold lower and cheaper for our new Chinese overlords, and for everyone else who, without P&L timing constraints, takes delight in such brief arbitrage opportunities.

From Bloomberg:

Imports from Hong Kong were 135,529 kilograms (135.53 metric tons) between January and March, from 19,729 kilograms in the year-earlier period, according to data from the Census and Statistics Department of the Hong Kong government. Shipments in March rose 59 percent from February, yesterday's data showed.


Demand has climbed in the world's second-largest economy as rising incomes and curbs on property speculation boosted purchases. China may become the biggest user annually this year, according to a forecast from the producer-funded World Gold Council. Last year, total Indian demand including for jewelry and investment was 933.4 tons to China's 769.8 tons.


"We're looking at another solid year for Chinese demand based on these early numbers," said Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd. "While it's largely related to price, negative real interest rates should keep demand strong."


Gold has lost 15 percent from its record $1,921.15 an ounce in September as the European debt crisis, combined with reduced expectations for further monetary easing by the Federal Reserve, boosted the dollar. Spot gold traded at $1,637.32 an ounce at 9:41 a.m. in Singapore, 4.7 percent higher this year

The geopolitical implications are obvious:

The prospect of China becoming the largest bullion user reflects the country's economic ascendance. Per capita gross domestic product has more than doubled since 2000, according to World Bank data. The country is already the world's top consumer of copper and biggest producer of steel.


Gold shipments to the mainland climbed for a third month in March to 62,913 kilograms, the Hong Kong data showed. That compares with 39,668 kilograms in February and 9,166 kilograms in March 2011. China doesn't publish gold-trade data. Last year, imports from Hong Kong more than tripled to 431,226 kilograms.


The purchases through Hong Kong may signal that the mainland is accumulating reserves, London-based brokerage Sharps Pixley Ltd. said in February. The nation last made its reserves known more than two years ago, stating them at 1,054 tons.

Finally, we can only hope that all those who clamor for an RRR, or even interest rate, cut are wrong, as the paradigm shift in China as one of pursuing more inflation will light yet another major fire under gold, which would make purchases on the cheap problematic. In fact, the status quo, in which a very "uncivilized" China is buying as everyone else is selling, is ideal for all intents and purposes.

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 05/08/2012 - 10:02 | 2406318 maxmad
maxmad's picture

BUT, Warren "Geritol" Buffet said that it wasn't money??? huh...

Tue, 05/08/2012 - 10:03 | 2406325 SilverTree
SilverTree's picture

Silver and Gold on sale today!!



Tue, 05/08/2012 - 10:13 | 2406377 Short Memories
Short Memories's picture

They must be biding their time today though, trying to avoid catching the falling knife

Tue, 05/08/2012 - 10:21 | 2406411 GetZeeGold
GetZeeGold's picture




They're pretty damn good at what they do.......Benny still won't get a Christmas card from them this year however.


The Chinese have learned from the Rothschild's well....when everyone's running out of the room they walk in and calmly put the gold into their back pockets.



Tue, 05/08/2012 - 10:23 | 2406428 SilverTree
SilverTree's picture

Quietly = unreported.

Tue, 05/08/2012 - 10:29 | 2406457 GetZeeGold
GetZeeGold's picture



They'll let the data out in a quiet report.......bout 6 months from now.


Tue, 05/08/2012 - 10:35 | 2406496 Levadiakos
Levadiakos's picture

Gold is dead munny

Tue, 05/08/2012 - 10:43 | 2406545 GetZeeGold
GetZeeGold's picture



$20 gold piece still buys a decent suit.


Tue, 05/08/2012 - 11:06 | 2406650 Levadiakos
Levadiakos's picture

So does $20

Tue, 05/08/2012 - 11:11 | 2406677 GetZeeGold
GetZeeGold's picture



Now you're just acting stupid. Time to get off daddy's computer.



Tue, 05/08/2012 - 20:07 | 2408588 VegasRage
VegasRage's picture

Yeah, for your Ken or  GI Joe doll! 

Tue, 05/08/2012 - 10:57 | 2406613 azzhatter
azzhatter's picture

Sewing it into their Mao shirts

Tue, 05/08/2012 - 10:14 | 2406381 Hmm...
Hmm...'s picture

I continue to be the only person on all of ZH who is way upside down on his gold purchases. 

I told myself a while back I'd buy if it gets below $1600, so I"m watching closely.  but I'm still unnerved by how closely Gold has tracked the equity markets since Fall 2011.

I'll still probably buy again because my dollars are just sitting in a credit union earning 0.8%, but I wish that gold wasn't acting like another plaything of the markets.

Tue, 05/08/2012 - 10:32 | 2406476 mayhem_korner
mayhem_korner's picture



You're being fooled by the banksters, who are manipulating gold specifically to make it look "like everything else".  Buy on a dollar-cost-averaging basis and forget about the published "price."  It is about accumulating, not timing.  I've been buying for some time and my weighted-average cost is around $900/oz, which includes some recent buys in the $1,600s and $1,700s. 

Tue, 05/08/2012 - 10:35 | 2406503 Pladizow
Pladizow's picture

What's your eye and hair color?

Tue, 05/08/2012 - 10:38 | 2406523 mayhem_korner
mayhem_korner's picture



My hair color is blonde - ever since that boating accident down in the Galapagos - lost all my stuff but got a permanent beach head.  My eyes are exactly the color of your avatar (same pupil shape, too).

Tue, 05/08/2012 - 10:37 | 2406509 Levadiakos
Levadiakos's picture

You're being fooled by G Gordon Liddy. Gold is for sellers

Tue, 05/08/2012 - 11:43 | 2406820 Upswaller
Upswaller's picture


Tue, 05/08/2012 - 10:39 | 2406508 ActionFive
ActionFive's picture

I'm still unnerved by how closely Gold has tracked the equity markets since Fall 2011.


Others are unnerved by how it hasn't since February.

The dollar is lawless.

Tue, 05/08/2012 - 10:11 | 2406365 Sudden Debt
Sudden Debt's picture

It aren't paper dollars because everybody want's to get rid of those unlike gold.

So in a way he's right.

It would actually be a insult to gold to compare it to paper money!

Tue, 05/08/2012 - 10:39 | 2406535 Levadiakos
Levadiakos's picture

Gold is for losers like you. Buy all ya want. Plenty of it around.

Tue, 05/08/2012 - 10:44 | 2406550 GetZeeGold
GetZeeGold's picture



Thank you......I will.


Tue, 05/08/2012 - 11:36 | 2406778 Peter Pan
Peter Pan's picture

Is Levadiakos still a soccer team or is it broke like the rest of fiat enslaved Greece.

Tue, 05/08/2012 - 10:12 | 2406368 DeltaCharlie
DeltaCharlie's picture

Keep buying stocks Warren... try not to cut your fingers while you're doing it. 

Tue, 05/08/2012 - 10:17 | 2406394 jus_lite_reading
jus_lite_reading's picture

They might be buying gold but they are uncivilized...




"Supposedly, the television team paid a lot of money to get some of the pills, and when they tested them, found the pills’ contents were 99.7 percent human, and were also able to discern the babies’ gender from the powder, as well as found hair and nail remnants."


Eat your Chinese iPads boys!

Tue, 05/08/2012 - 10:24 | 2406429 Sudden Debt
Sudden Debt's picture

Damn... in the past it was funny that the chinese ate stuff like dried donkey dick but this shit is just creepy!

Where's the fucking moral?


Tue, 05/08/2012 - 10:54 | 2406598 Levadiakos
Levadiakos's picture

You the only one eating dried donkey dick Hoss

Tue, 05/08/2012 - 11:44 | 2406824 Upswaller
Upswaller's picture


Tue, 05/08/2012 - 12:01 | 2406890 dogbreath
dogbreath's picture

its been here a whole 9 weeks,  ignore it because it won't keep itself amused for very long. 

Tue, 05/08/2012 - 12:09 | 2406931 jus_lite_reading
jus_lite_reading's picture

Hey Leo! Is that you?!?




Got those solar panels working to make green shoots??

Tue, 05/08/2012 - 10:26 | 2406448 augustusgloop
augustusgloop's picture

lather, rinse, repeat quote: “I think gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939, but civilized people don’t buy gold, they invest in productive businesses.”

-object lesson in gold being the ultimate portable store of wealth. harder to confiscate than department stores, stock certificates, property, works of art, etc.

-based on 'what happened' between 1939-1945 that the jews were the civilized ones fleeing the barbarians.  

Tue, 05/08/2012 - 10:55 | 2406602 Levadiakos
Levadiakos's picture

Try buying a ham sandwich with a pound of it and expecting change

Tue, 05/08/2012 - 11:43 | 2406818 Peter Pan
Peter Pan's picture

And try buying gold with a ham sandwich. Honestly, statements such as yours add nothing to the debate. We on't have to agree but let's be a little more intellectually rigorous,

Tue, 05/08/2012 - 14:32 | 2407546 Think for yourself
Think for yourself's picture

I'd consider buying a nice 5-course meal with bottle of wine for me and my girl - with a shiny 1-oz coin of silver, but only once it reverts to its historic value of 1 week of hard human labor (should be more now thanks to the above-ground depletion of reserves due to newly found uses in the electronic age).

For a ham sandwich, you pay with 3-nines silver granulate, the kind that silversmiths buy to melt and craft. Small 1 gram droplet for you, thanks, keep the change.

Tue, 05/08/2012 - 14:10 | 2407449 Matt
Matt's picture

10 week member, seems to troll hard about once every week or two. What's the betting pool on how long he lasts?

Please note: a pound is not a common unit of gold. usually it is measured in troy ounces. Besides, I think 'junk' silver is the more appropriate unit for purchasing a ham sandwich. You wouldn't try to buy a ham sandwich with a $20,000 bank draft either, would you?

Tue, 05/08/2012 - 11:55 | 2406867 TheFourthStooge-ing
TheFourthStooge-ing's picture


BUT, Warren "Geritol" Buffet said that it wasn't money??? huh...

You just knew that when the Oracle of Geritol and his sidekick, Sleestak Magoo Munger, were performing their choreographed piss-on-gold routine, a buying opportunity would soon present itself.


Tue, 05/08/2012 - 10:05 | 2406322 Cognitive Dissonance
Cognitive Dissonance's picture

Sounds like China is a Gold stacker. Won't those Chinese be surprised when America has all the US dollars and won't let anyone else play in their sand box.


Tue, 05/08/2012 - 11:31 | 2406761 NotApplicable
NotApplicable's picture

America is about to get rich!

Not to mention, learn the definition of nominal.

Tue, 05/08/2012 - 13:04 | 2407143 Chaos_Theory
Chaos_Theory's picture

Step 1:  Acquire all existing U.S. Dollars

Step 2:  Recycle all cocaine residue from said accumulated U.S. Dollars

Step 3:  Legalize Cocaine and Marijuana

Step 4:  July 4th 2012 Party across the U.S. with free cocaine and mary-j, rolled and smoked in said U.S. currency....problem solved for a whole day!

Tue, 05/08/2012 - 13:55 | 2407398 Jam Akin
Jam Akin's picture

Sell Drugs to China.  Get Gold back.  History repeats.

Tue, 05/08/2012 - 20:50 | 2408660 StychoKiller
StychoKiller's picture

China does NOT look back too fondly on the opium wars...

Tue, 05/08/2012 - 10:06 | 2406332 Sudden Debt
Sudden Debt's picture



Tue, 05/08/2012 - 10:05 | 2406334 New Revenue
New Revenue's picture

I guess the Chinese understand the concept of buy low....

Tue, 05/08/2012 - 14:14 | 2407479 Matt
Matt's picture

Buy low, sell never. Hoard it and back your currency with it instead. 

Tue, 05/08/2012 - 10:05 | 2406336 monmick
monmick's picture

Remember what happened the last time Ron Paul was in a hearing talking about gold?

Tue, 05/08/2012 - 10:29 | 2406443 GetZeeGold
GetZeeGold's picture



Yeah he flashed the secret silver coin.


Benny was clearly not amused by that.


Tue, 05/08/2012 - 12:32 | 2407015 viahj
viahj's picture

equity flash correction?  gotta scare the pensioners every time we talk about sound money policy.

Tue, 05/08/2012 - 10:05 | 2406337 fonzannoon
fonzannoon's picture

This miner smackdown is epic. I did not own them in 2008. Can anyone on here say how this compares?

Tue, 05/08/2012 - 10:21 | 2406410 chubbar
chubbar's picture

Valuation wise todays miners are at or below the lows of 2008 right now. Plenty of miners that are trading pretty close to cash in the bank with little or no premium given for proven reserves or infrastructure. Assuming the whole financial system doesn't collapse and the DTCC doesn't get wiped out by a mysterious virus, this is an incredible buying opportunity. This big down wave will probably be "it" before we get another 12 month bull run. Of course, I have no idea what is coming so it is still a gamble but buying them at these "cash in the bank" levels is pretty fucking low risk. I'm hoping this down move lasts another $100!

Tue, 05/08/2012 - 10:05 | 2406339 ss123
ss123's picture

What a bunch of barbarians.

Do NOT follow this link or you will be banned from the site!