Big Chinese gold import figure from Hong Kong in November
By Lawrence Williams
While the Hong Kong gold export figures may no longer provide such a good proxy for the level of Chinese gold imports as in days past, given the apparent rise in imports through Shanghai and Beijing (which are not imported) the Hong Kong figures do provide an important indicator to what is going on in terms of Chinese gold consumption. We still consider the weekly Shanghai Gold Exchange (SGE) withdrawals figure as the most significant statistic in this respect for overall demand but the Hong Kong figure (the continuation of statistical data set up under the old British Administration) does provide an indicator of gold import flows into China.
Thus the latest figure to emanate from Hong Kong do support much of our other data which show that China’s gold imports (and consumption) have been picking up strongly in the latter part of the year as the Chinese New Year approaches. Figures released by the Hong Kong Census and Statistics Department show that net gold exports to mainland China via this route totalled 99.11 tonnes – the highest level for nine months, following a strong month in October too when a net 77.6 tonnes were imported into mainland China through the former British Crown Colony.
Chinese gold demand tends to pick up in the runup to the Chinese New Year celebrations, which next year falls at one of the latest possible dates on February 19th. With the strong figures seen through the SGE, and now Hong Kong we could be looking at a very strong December, January and February period for gold imports into mainland China and total gold consumption there. See: Chinese gold demand already over 2,000 tonnes in 2014
The Chinese also tend to be price sensitive in their buying patterns and low gold prices may also be stimulating demand both from consumers directly, and fabricators and traders looking to build up stocks ahead of the New Year celebrations.
Recently we noted here that Chinese gold demand as represented by withdrawals from the SGE had already reached over 2,000 tonnes and was heading towards a year-end total of probably just under 2,100 tonnes – getting close to 2013’s 2,181 tonne record. It looks like Chinese demand, which on a fundamental supply/demand basis should in theory be the key factor in driving up the gold price, seems to be as strong as ever. However as we noted here in our article on silver, also posted today that, increasingly, real supply/demand fundamentals are being superseded by manipulative trading on the futures exchanges in setting gold price, and silver price, levels. But even so, this incessant flow of gold from weaker hands in the West to strong hands in the East is certain, one day, to have a positive impact on price, but when that day will come is hard to predict.