China Gold Imports Drop for Fifth Month on Weak Demand
I know that China has other avenues of importing gold that can go undetected however we are seeing continued declining import data this year compared to last year. Other countries such as Russia have been picking up the slack and less gold has been flowing out of the western world. The price is only slowly drifting down, attacks on gold futures are having less of an impact, and people seem to be talking about the precious metals less and less. Maybe this is a sign that gold is truly bottomed and is just waiting for the bull market to resume.
Here are some of the stats from the article…
– Net imports totaled 21.1 metric tons, compared with 36.4 tons in June and 113.2 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to Hong Kong from China fell to 17.9 tons last month from 19.7 tons in June, the statistics department said in a separate statement.
– China’s consumption plunged 52 percent to 192.5 tons in the second quarter this year from a year earlier
– Mainland Chinese buyers purchased a total 38.9 tons in July including scrap, compared with 56.1 tons in June and 129.2 tons a year earlier, data from the Hong Kong government showed.
Interesting theory Marc. I had not thought of that. It will all come to a head eventually… we just don’t know when.
Accumulate when things are quiet.
Great theory, Marc, and the “clue” here is the recent Russia / China energy deal. Energy producer Russia and energy consumer China absolutely understand the “end game” and that energy is the cornerstone of any modern industrial economy. Meanwhile, the United States is about to get drop-kicked back into the agrarian economy of the 1800’s. Food will be the “new gold” if one doesn’t have gold, itself.
MAD,
UNFORTUNATELY..I couldnt agree more……unbelievable financial destruction is such a short amount of time!
China also starts to import through Beijing this year. So import from Hong Kong no longer account for almost all the import. With what India government is doing, the picture is getting fussy.
Just follow the money, Lawrence, and things will never be fuzzy.
I dunno. I wonder about all this stuff. I think it is mostly BS.
First the China/Russia energy deal is chicken feed. 400bn$ in 10 years = 40 billion$ per year. Bernanke could print that much money at the push of a button in merely 2 weeks with QE3 at $85bn a month a couple of year ago, month after month with no immediate negative consequences. The Russians are going to be mining oil and gas in Siberia and who knows where at -40C temperatures to sell to China, while Bernanke or his successor sit in as nice warm office printing the same amount of money without effort. So who is more powerful, USA or Russia?! Get real.
You’re making the all-too-common error of confusing “price” with “value”.
Second point, calculate the number of barrels of oil represented by this. At $1000 per barrel it is 4 billion barrels of oil equivalent. In 10 years, 3650 days, it is 1.1m barrels per day. That’s a lot of oil but only 1/5 of Russian oil exports if that. They probably exported that much oil and gas to China already so quite possibly the deal is just for show.
I would think Russia is in a bad spot with rouble at all time lows against US dollar. Why would that be? Perhaps because their monetary and fiscal policies are great successes? Coming off the biggest commodity demand boom in history with the biggest buildout ever in China (perhaps to be compared to the Marshall Plan?) why is the rouble not coming off all time highs, since Russia is such a huge commodity exporter? They should be rolling in money as a nation and the rouble should be strong. So why isn’t it? As the construction boom and property bubble slow down or deflate and the USA increasing oil and gas production rapidly and holding down the price of oil, what promise is there for strength of the rouble in future as the ‘share price’ of Russia Inc?
The US has put the squeeze on Ukraine and broken it and forced the Russians into annexing Crimea and all sorts of other actions are happening in East Ukraine, making it more like Iraq or former Yugoslavia every day. There is no way that that is good for Russia. They have a war zone next door instead of a stable nation.
If Russia ISN’T conducting business in US$ – as is their clearly stated INTENT and DIRECTION – they don’t have to CARE what the value of the Ruble is versus the US$. As long as their counterparty – whomever that might be – is satisfied that the Ruble is “good for it”, then Rubles it will be.
With respect to Chinese gold imports, I think a lot of BS has been talked about their endless gold demand. What happens if China deleverages or decides they have enough gold?
If China already has 5,000 or 10,000 tonnes of gold as some like to suggest, maybe they will one day announce that they have enough of it. If they have already bought all that much and gold peaked at only $1920 and is now under $1300, what prospect is there for all the BS promoter talk about $2,000, $3,000 and $12,000 gold?
We have this obsessive image of how wise the Chinese are but they bought of gold like mad at the very top of the market in 2010-2012. That would be like going on a buying binge in 1980. Anyway, how delighted you might be as a Chinese citizen taking your government’s advice to purchase gold with your savings over the past few years and now you are 33% down. I would be pretty p**sed off with my government and probably would not listen to them again for a while. How many of those will puke their physical gold if it goes under $1000? I don’t buy that assumption that the gold gone to China will never come back.
That’s not how the Chinese mind thinks – at either the individual or the sovereign level – and clearly you don’t understand that.
You are totally off base with Chinese demand. I am Chinese and have been here for more that quarter of a century. I go back every couple of years. The way you speculate on Chinese demand means that you are using western values to judge China. From what I know, a few factors make Chinese demand a continuous demand for hard asset including gold:
1. Western people are very confident and trusting their financial system and their commerce but Chinese don not. People always try to save as much as they can especially when people age. Since paper money is devaluating fast, they always try to put money on something with real value such as PM, house, land, etc.
2. People’s earnings is increasing fast even the inflation is fast as well. My salary was 56 yuans/ month when I was there during 1980s. Now it is around 5,000-10,000 yuans/month. The price is 10 times higher especially necessities. Off course electronics are not much higher than before.
3. Westerners are more realistic and buy things cheap to get the best value with their money. Chinese care about face value a lot and they buy luxury items to show off. Gold jewelry is one of those show-off items along with LV bags, cars, french wines, etc.
4. Westerners believe in propaganda by their governments and news media and Chinese hate government and officials. They always think things are bad since government claims it is good. They find all reasons to believe that government is trying to harm them even it is not true. They buy hard asset to protect themselves.
5. Chinese people have natural affinity to gold and silver since near all the words describing finance use gold/silver as part of the character or directly using gold/silver as substitutes. For example, bank vault, the name translates to gold storage (jin Ku) even there is no gold; spending money people will say “spend silver”. When you spend a lot of money, your friend will say “Wow, how much silver you have wasted!”
6. When young people get married, parents of the couple are supposed to prepare their children for things they can feel proud otherwise they choose not to marry. Parents have to do it even sometime they get exhausted financially. This is very bad side of Chinese culture in my opinion. These items include houses, gold jewelries, cars, etc.
7. A lot of young people live with their parents so they have a lot of money to spend especially since most high expense items in the west do not exist there, including insurance, fees, tax, etc. They will buy all kind of stuff including jewelries. I can never imaging I can spend like them even I make more money. A lot of my expenses are fixed regardless whether I try to save money but they don’t have much fixed expenses.
Also I believe that people in China do not try to time the market. They buy when they need it and a lot of times they buy it because it is expensive. Otherwise how can they brag to their friends? Girls compare what they have among them, not too different than girls here but much more seriously.
Also Chinese government is fully aware the danger of US dollar holdings. But they cannot get rid of it yet since it will turn the world financial system up side down. There is a concept called “hide wealth among people” (藏富于民). It is to say that people becomes a sponge for wealth so it is not totally the burden for government since government tends to have corruptions. All my friends in high level do not trust themselves. Also accumulation of gold by government push gold price higher. There is another concept called financial bonding, which means China accumulates US treasury to make sure it assures mutual destuction if US wants to barm China. The treasury can be both official holdings and private but it seems people have no interest for US treasury since they believe US is trying to default their way out.
Post of the DAY, Lawrence!
I would have to agree………great post…….on “hide wealth among people”
I have another theory Cory. I think that China and Russia are so close banned together that one country is feeding off the other. Kind of like in a bicycle race..one goes out in front and drafts for the guy behind him…These governments know what the end game is..UNFORTUNATELY our leaders have no clue…they talk and act like the USA hegemony is chugging along like an unstoppable locomotive..uh…all indications and research that they are wrong…dead wrong…yikes!