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According to Bloomberg,
whose calculations were based on Hong Kong customs data, net gold imports
into China more than doubled in the first half of 2013 to 493 metric tons, up
from roughly 239 tons over the same period in 2012.
The China Gold
Association said gold consumption in China jumped 54 percent to 706.36 metric
tons in the first six months of 2013.
Bloomberg reported
takeovers and asset purchases by China�s gold mining companies reached a
record $2.24 billion this year, up considerably from 2012�s record of $1.96
billion worth of M&A activity.
Domestic Chinese gold
deposits are less than five percent of the global total and cannot supply
growing Chinese consumer demand so Chinese producers are aggressively buying
up gold companies and mines.
Bloomberg
And China has a large
foreign reserve bank account with which to work� According to Bloomberg
China�s foreign reserves (30.2 percent of the world total at the end of 2012)
surpassed the value of all official bullion holdings in January 2004 and rose
to $3.3 trillion at the end of 2012. Two-thirds of China�s assets are
dollar-denominated, that�s a lot of U.S. dollars that they can turn into
physical assets and they are working hard to do so.
The World Gold Council
(WGC) estimates Chinese consumer demand may top 900 tons this year handily
beating China�s record 778.6 tons of demand in 2011. Owning gold was banned
in China for most of the 20th century so the Chinese are playing catch up to
India�s average yearly imports of 963 tons of gold � 2013 could be the year
China imports more gold then India.
Premiums paid by jewelers
for physical supply in the first half of 2013 jumped fourfold in China - up
45 percent.
In the second quarter of
2013 consumer demand for gold jumped 71 percent in India, last year�s biggest
gold buyer, but over the same time period gold demand gained 87 percent in
China, 2012s second largest buyer.
�Mainland Chinese
purchasers have been ferocious. First, they emptied stores in their own
country. Caibai, Beijing�s largest gold merchant,
had a queue 30 feet out the door on the morning of the 19th. �So many people
in line,� remarked a customer in Nanjing, where one person splashed out 2.9
million yuan on ten gold bars each weighing a
kilogram. Retailers ran out of stock in Guangzhou. The China Gold Association
reported that on the 15th and 16th retail sales of gold tripled across China.
Daily sales soared to five times the usual level at one retail chain.
Volume on the
Shanghai Gold Exchange, considered a proxy for the metal�s demand in China,
surged, setting consecutive records of 30.4 metric tons on the 19th and 43.3
tons on the 22nd. The previous record was 22.0 tons on February 18 of this
year.
As Chinese emptied
the shelves in their own country, they also went south and swarmed shops in
Hong Kong, sometimes in groups. Chow Tai Fook, the
world�s largest jeweler by market capitalization, said some stores popular
with Mainland Chinese ran out of gold bars and that demand had not been as
strong since the late 1980s.
Demand for �9999�
bullion�99.99% pure gold�was five times normal according to Haywood Cheung Tak-hay, president of the Chinese Gold & Silver
Exchange Society. His organization effectively ran out of holdings as members
tried to meet supply shortfalls. �In terms of volume, I haven�t seen this
gold rush for over 20 years,� Cheung told the Financial Times. �Older members
who have been in the business for 50 years haven�t seen such a thing.� Gordon G. Chang, 4/28/2013,China
Goes Gold Crazy
It has been reported that
on June 14th 2013 over 10,000 Chinese lined up, in the streets of Jinan, to
buy gold bullion.
Australia & New
Zealand Banking Group Ltd., Deutsche Bank AG and UBS AG opened new eastern
gold vaults this year.
On the trail of
the world�s gold
According to Eurostat
data U.K. bullion exports (London is the world�s largest gold market) rose
nearly tenfold through the first six months of 2013. The U.K. sent 798 tonnes (equal to almost 30 percent of global annual mined
supply) of its gold to Swiss refineries in comparison to 83 tonnes for the first six months of 2012.
Four of the world�s
largest gold refiners, Metalor, Pamp,
Argor-Heraeus, and Valcambi,
are located in Switzerland (Swiss refineries process 70 percent of the
world�s gold supply) and only they can handle the massive volume of London
Good Delivery 400 oz bars that needed to be melted
down and recast into the smaller bullion products that Asian buyers prefer -
physical gold bought by Asian buyers is usually in the form of small bars and
coins.
Goldminersreport.com
Hong Kong shipped
91%, or 736 tonnes, of its total gold exports for
the first 6 months of the year, to mainland China.� RJ Wilcox,A
Giant Sucking Sound from the East
The world�s gold is being
swallowed up by China � a very large chunk of the world�s supply of the
golden metal is heading from the U.K. to Switzerland to Hong Kong and then
into mainland China.
Where is most of
this gold coming from?
Four words � Gold
Exchange Traded Products or ETPs as they are commonly known.
  World Gold Council
Conclusion
In �Subterranean
Homesick Blues� Bob Dylansang �You don�t
need a weatherman to tell you which way the wind blows.� Well, the winds
are blowing western gold eastward and the Chinese consumers who are the
beneficiaries of a lack of western foresight and centuries of accumulated
financial survival knowledge aren�t complaining one little bit.
Across the globe
individual nations added 534.6 tons to reserves in 2012 - the most since 1964
� and will likely add an additional 350 tons in 2013. Chinese consumer demand may top 900 tons this year.
Consider:
- China
is the world�s biggest gold producer country and soon is going to be its
largest consumer of gold.
- We�re
seeing a physical transfer of gold - this is not a paper exercise, the
world�s gold is disappearing into Communist mainland China.
- China�s
demand for gold is insatiable and demand is going to keep increasing. Expect this
increasing demand to
last for many years
The Chinese people
rightly believe the best way to protect and preserve wealth is through owning
gold bullion. Their communist leaders believe in a future where the yuan is fully convertible, freely traded and gold backed.
A future where the yuan is the world�s reserve
currency.
I�ve got some gold,
getting even more is on my radar screen, it should be on yours as well. If
things go to hell are you going to be able to get your hands on some gold?
Probably not is my guess. How about displaying some Eastern common sense and
preserving/protecting your family�s wealth? Get proactive, the winds of war
are blowing, globally the economic and political landscape is a mess.
Maybe the best reason to
buy some gold is simplicity at its best � buy gold just because the Chinese
are. Over the last decade this investment strategy has worked for ahead of
the herd readers in uranium, copper, rare earths etc. The best investment
advice you�ll ever get from me or anybody else is �Buy today what is dear
tomorrow.� That sounds like gold!
Is the buying of gold,
and the shares of junior resource companies exploring for the precious
monetary metal (historically buying the shares of precious metal juniors have
offered the greatest leverage to a rising gold price), a priority on your
radar screen?
If not, it definitely
should be.
Richard is the owner of Aheadoftheherd.com and invests in the junior
resource/bio-tech sectors. His articles have been published on over 400
websites, including:
WallStreetJournal, USAToday, NationalPost, Lewrockwell,
MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Londonthenews,
Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire,
Indiatimes, ninemsn, ibtimes, businessweek.com, moneytalks and the
Association of Mining Analysts.
If you're interested in learning more about the junior resource and
bio-med sectors, and quality individual company�s within these sectors,
please come and visit us at www.aheadoftheherd.com
If you are interested in advertising on Richard�s site please contact
him for more information, rick@aheadoftheherd.com
***
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell
or the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been
independently verified.
Richard Mills makes no guarantee, representation or warranty and
accepts no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of Richard Mills only and are subject to
change without notice. Richard Mills assumes no warranty, liability or guarantee
for the current relevance, correctness or completeness of any information
provided within this Report and will not be held liable for the consequence
of reliance upon any opinion or statement contained herein or any omission.
Furthermore, I, Richard Mills, assume no liability for any direct or
indirect loss or damage or, in particular, for lost profit, which you may
incur as a result of the use and existence of the information provided within
this Report.
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