The latest announcement on Swiss gold exports – for January – showed that for that month the small European nation, which provides a significant percentage of Asian physical gold demand from its refineries, exported far more gold to Mainland China than to Hong Kong. 42.1 tonnes as compared with 21.5 tonnes. A chart from Nick Laird’s Sharelynx.com site detailing the latest gold export figures is shown below.
So why is this significant? For many years the vast majority of gold flowing to mainland China was imported first into Hong Kong and then to the mainland. So much so that Hong Kong gold exports into the Chinese mainland were taken by much of the world’s media and analytical consultancies as being a proxy for total Chinese gold imports. For the past few years, though, things have changed substantially with much more gold being imported directly, bypassing Hong Kong altogether. Yet still media headlines trumpet falls and rises in the Hong Kong to China export figures as though these are still a proxy for total mainland China gold imports. As the latest Swiss export figures show, this is most definitely no longer the case.
Hong Kong still remains an important conduit for gold imports to the Chinese mainland but its significance seems to be diminishing year on year which readers should bear in mind the next time a headline blares a fall in Hong Kong exports to China with the implication that this means that Chinese demand is falling accordingly.
Another interesting point from these Swiss figures is that over 90% of Swiss gold exports are flowing to Middle Eastern and Asian nations. Switzerland’s own gold imports come in primarily from the UK – still the world’s major gold centre. It flows via Switzerland for London good delivery gold bars to be re-refined and recast by the dominant Swiss gold refiners into the smaller bars and wafers which are mostly traded in the Middle East and Asia.
In January, Switzerland imported 166.9 tonnes of physical gold of which that from the UK totalled 61 tonnes – or 36.5%. Interestingly the second largest source of gold flowing into Switzerland was from Venezuela at 35.7 tonnes, thus confirming earlier reports that Venezuela, having only recently repatriated its gold to hold it within the nation, was now shipping significant quantities to Switzerland. This is thought to be being used to mitigate its precarious debt position in a series of gold swap agreements via The Bank for International Settlements.