The red dotted line represents the total outflows of GLD through last Tuesday. The gold bars are cumulative monthly imports of gold to China, through Hong Kong. You can see that China has absorbed roughly twice what most North American ETF holders have sold. It's actually more than that, because we only have Hong Kong import data up to the end of July. But it's even more dramatic than this. If you dig down into the data further, you find that cumulative gold imports through July surpassed the 26.7 million ounces (831 tonnes) that was imported to China for the whole of 2012. That means rather than being deterred from buying gold when its price was declining this year, the Chinese were snapping up the yellow metal as fast as they could. Further, last year Chinese miners produced 12.9 million ounces (403 tonnes) of gold, all of which stayed in the country. When you look at physical deliveries from the Shanghai Gold Exchange (SGE) vs. the COMEX and global mine production, you can see a clear trend this year:
Deliveries at the SGE are significantly greater than those at the COMEX. Delivery ratios on the Comex have consistently been under 10%, in contrast to more than 30% on the SGE. Through June, the SGE has nearly matched all of last year's total. What's even more astonishing: year-to-date deliveries on the SGE are close to global mine production. In the first six months, delivery reached 35.3 million ounces (1,098 tonnes), just 20% less than what all gold companies mined last year. It is headlines like these that the Chinese read—not what Goldman Sachs writes. It's not just the Chinese, of course. India, for now, is still the largest gold market. Despite relentless restrictions from her government, Mrs. Singh bought more gold jewelry and bullion last quarter than any other country.
China and India accounted for almost 60% of the global gold jewelry sector last quarter, and roughly half of total bar and coin demand. Further, both countries saw almost 50% more consumer demand in the first half of the year compared to the same period in 2012. The two countries are again setting records…
- China purchased 8.8 million ounces (275 tonnes), 87% more than last year
- India bought 9.9 million ounces (310 tonnes), 71% more than 2012
|If you find yourself agreeing more with Mrs. Chang than Goldman Sachs, you can snag two silver bullion products at a discounted premium in the current issue of BIG GOLD. You won't find these prices elsewhere, and the savings could pay for your subscription. Product is still available, so join the Chinese gold rush and stock up while prices are down with a risk-free subscription to BIG GOLD.|