Official statistics showed a huge rise in Chinese gold imports through Hong Kong in 2011, reaching just under 428 tonnes, an increase of around 260%, but the effects on the gold price were probably tempered by figures which showed that December imports by this route, ahead of the Chinese New Year, were substantially lower than a year earlier at 38.6 tonnes, a fall of over 60% year on year, despite the relatively weak gold price during that month.

The increase led to the usual speculation that perhaps the rise was in part due to off-the-record purchases for official reserves with the continuing theory that China government entities are buying on dips to exert a degree of control over the price as well as raise its reserves surreptitiously.  This is done by putting the purchases into a 'holding pot' which means it does not actually appear in the country's official Central Bank's gold holding figures until it is deemed politically expedient to make such an announcement and transfer the gold to its official reserves.


Thus speculation puts China's thirst for gold at probably over 800 tonnes last year, which is very close to that of India, which has for many years been the world's largest gold consumer. This means the two Asian giants between them are probably accounting, on their own, for taking in up to 70% of global gold production which is in the order of 2,500 tonnes annually. This offtake appears to be rising despite the higher gold price, while a number of other nations (mostly in the East and Middle East) also appear to be boosting their annual demand too. This is primarily solidly held gold and is not traded metal as it might be in Western nations, and thus only likely to find its way back onto the market at a time of dire economic personal or national necessity.

Hmm... why might this consumption be rising "despite the higher gold price"? How about (a) The gold price is not rising fast enough to compensate for fiat money creation, and/or (b) the gold price was so suppressed going into the economic crisis that it is still cheap relative to decades of monetary expansion. Just sayin'.

Comments: Be the first to add a comment

add a comment | go to forum thread