How The World Is Being Fooled About Chinese Gold Demand Kindly note the pattern There is a story being told to the masses about Chinese gold demand that is grossly incorrect. The huge discrepancy between numbers from the World Gold Council (WGC) and actual gold demand is so wide yet cunningly hidden Imust conclude there is essential information about physical gold demand deliberately kept privy. Let's go back to April 2013; the price of gold made a nosedive, which spawned an unprecedented physical buying spree across the globe, most notably in China.Withdrawals from the vaults of the Shanghai Gold Exchange (SGE),that equal Chinese wholesale demand, closed at 2,197 metric tonnes December 31,2013, up 93 % y/y. However, the WGC (the global authority on gold) initially stated Chinese consumer gold demand had reached 1,066 tonnes in 2013, an astonishing 1,131 tonnes less than wholesale demand. In theChina Gold Association(CGA)Gold Yearbook 2013it was disclosed China had net imported 1,524 tonnes and domestically mined 428 tonnes. Without counting scrap supply this adds up to 1,952 tonnes; adding scrap total supply has been well over 2,000 tonnes. It's impossible consumer demand was only 1,066 tonnes. Finally the WGC admitted their initialestimateof 1,066 tonnes of Chinese gold demand was grossly understated. By email they wrote me on February 12, 2015: See the rest of the article here https://www.bullionstar.com/blogs/k...ld-is-being-fooled-about-chinese-gold-demand/
I don't know a lot specifically about the CGA, but I do know that Chinese figures on certain economic issues are as good as fiction. I wouldn't put too much faith in the domestic production figures in particular since they buy all domestic production the only people who know exactly how much gold they have been producing are the auditers and the people they report to. We know China isn't releasing accurate figures on how much gold they have and how much they are buying. It's going to be very interesting to see what they do with it all though. I know they see it as insulation but that only works if the world knows you have it to back up whatever moves your making. Perhaps they are saving it for the day they really float the yuan. My personal theory is that they will use it to better control over risky deliberate money printing. If they feel they need to inflate the yuan to stay competitive (after a float) and things get a little too crazy they they can just add 500 tons of gold to official reserves and pull things back a bit. Somewhere in a file at Langley there's an accurate report on Chinese gold reserves. There are probably a couple guys trying to talk about it and convince their coworkers that it's important information that should be acted on and that they should be briefing relevant treasury and fed officials but getting nowhere. Then one day in a few years time that report and those guys are going to be suddenly very important.
It's more How The World Is Being Fooled by Koos Jansen. He wrote "The 2,000 tonnes of gold were consumed by consumers in China." Gold is only consumed when it ends in garbage that isn't recycled. Alike happens for quite some silver within various products. "Consumed by consumers" haha. He also writes that gold export is prohibited by the government, so there's no gold leaving China, so that "net" is already "measured" there. Yet, there are articles that say that China serves as a pass through for India. How so no gold leaving China? It's all a matter of choosing terminology and interpretation.
I'm not sure of his exact meaning but I know when many people talk of no gold leaving China they are talking about China not exporting ANY domestic production.
Deportation of people was pretty common during nationalsocialism time. "Common" doesn't make true. People that buy gold store it, they don't consume it. Quite simple no? This is what WGC replied, (according to Koos, he can claim whatever but let's assume true): "Our figure for Chinese consumer demand in 2013 has since been revised upwards to 1,311.8 tonnes from the original figure of 1,066 tonnes published in the full year 2013 Gold Demand Trends report. " This is what Koos made of it: "The 2,000 tonnes of gold were consumed by consumers in China." A teacher can buy 1 kilo apples. That doesn't mean that he teaches about apples in the classroom. It's not because a consumer buys gold, that he consumes gold. Yet, Koos does his best to insinuate it, alike the gold travels through the stomach to end along the toilet in unrecovered waste. That's where I stick the ugly label. People that have no intention to fool others link to sources. Koos articles' links are incestuous. The "best" is a double excuse like "In the next chart we can see total demand from 2004 to 2013 as disclosed by the China Gold Association (CGA) Gold Yearbook 2013, which is written in Chinese and only published in hard copies;" I came across alot China and gold containing sentences on pm related places. I sometimes wonder where these would end if all people that speak English would speak Chinese too. A destination named Fairytale Land wouldn't surprise me.
I'm disappointed in Koos that he reverts to conspiracy theory re WGC's figures, just plain silly. If he was objective he would consider other possibilities, like maybe GFMS lost some key staff in what is a difficult job (speaking theoretically), maybe they just focus on what they can know with reasonable certainty and put the rest into Net Investment (BTW, the CGA's own estimates of consumer demand (to use their term for retail) are lower than WGC/GFMS and CGA puts the rest in Net Investment). Secondly, I consider it nave to just take anything coming out of SGE, CGA or China as absolutely true, to consider that everyone there follows the SGE "rules" and so there is very little dodgy gold financing etc etc. Interesting point phrenzy makes about Chinese mine figures. Here is another conspiracy theory - China is deliberately trying to give the Western world the view they as a country (individuals and Govt) are accumulating heaps of gold, more than they actually have. China knows that analysts are using Koos' "gap" to infer how much gold the central bank has accumulated. The objective is that it allows them to announce a big central bank figure that the market will accept, when in reality they will have less - its a bluff. They aren't going to let anyone audit it, and you can bet no China cheerleading goldbugs will demand one. The trick is to report a figure as large as possible that is believable, as it gives them a bigger seat at the table.
@ Pirocco. If you are interested in how gold from ROW gets imported into China and exported to India please read https://www.bullionstar.com/blogs/koos-jansen/chinese-gold-financing-deals-explained/ It can only be done through CSSA's, that are separated from the Chinese domestic gold market. CGA Gold Yearbook 2013 (released in 2014) http://www.cngold.org.cn/newsinfo.aspx?ID=1147 The conference "China Gold Congress and Expo September 10 -12, 2014" its website is taken offline http://eventegg.com/china-gold-congress-and-expo-2014/ Only some leftovers across the web http://www.gold.org/news-and-events/events/china-gold-congress-and-expo-2014 At this conference the Yearbook was released by Song Xin (CGA) From Sina Finance http://news.sina.com.cn/c/2014-09-11/203430828532.shtml From Tianya http://bbs.tianya.cn/post-333-545138-1.shtml If you know someone in China he can buy an illegal scanned version for you. Perhaps here https://www.google.nl/url?sa=t&rct=...l08GNpN2FSGSgWIHA&sig2=QRb5pJQqTRN2sRm6Zz-b5g @ Bron. The reason I speculate is because the official story that is presented doesn't make sense to me (just look at export from ROW to China and add mining plus scrap). For that I'm wiling to share "my opinion", next to all the data out of China. GFMS losing some key staff. Right, that would explain all, and why both GFMS & WGC lost all common sense. "China knows that analysts are using Koos' "gap" to infer how much gold the central bank has accumulated." I would not know if "China" has any idea of who I am. 99 % of the industry doesn't know me. As for data from China. It's not like they're bragging about this, or it would be published in English like http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm They still publish SGE data only in Chinese and they don't publish gold trade or official reserves normally like others countries. Why would that be? But if you think they are actually buying and mining far less... well, that's what makes a market.
If China does not export gold as mentioned above in this thread then how come they are exporting so much jewellery? For example http://www.reuters.com/article/2014/11/06/us-china-currency-yuan-idUSKBN0IQ2GU20141106 "Jewelry and precious metal exports jumped 678 percent year-on-year or $9.4 billion, potentially providing evidence of a rise in fake trade flows, economists at ANZ in Hong Kong said in a research note on Monday. A media report last week said authorities were investigating suspected irregularities in the surge in precious metals exports. China launched a crackdown on falsified invoicing in 2013, and in September the currency regulator said it had stamped out the practice after uncovering $10 billion worth of fake trades. " That would account for 241 metric tons alone and another 10 billion in fake trades- leaving China but Chinas internal demand for Jewelry has skyrocketed as well and is vastly greater. Taking a different angle http://www.gia.edu/gems-gemology/spring-2014-lucas-chinese-gem-industry "The Chinese diamond industry has benefited greatly from the Diamond Exchange. Before its formation, the official value of diamond imports was about US$1 million annually. By 2011, diamond import value had reached over US$5 billion annually, of which around $2 billion was imported solely into mainland China (figure 22). According to the Diamond Exchange, imports dropped by 10% in 2012 due to worldwide economic conditions, but indications pointed to a higher value for 2013." "By 2012, China consumed 518.8 tons of gold jewellery and was the world's fastest-growing market for gold jewellery; more than 75% of Chinese women in urban areas own a significant piece of gold jewellery (World Gold Council, 2013). Two-thirds of Chinese women regard gold jewellery as more of an investment than an adornment. Yet in 2013, some 6.6 million Chinese brides were expected to receive gold as part of their wedding ceremony (World Gold Council, 2013). Clearly, gold also holds an emotional and sentimental value in China. " I'm sure there are people with far far more insight into this on this thread. So here is my simple question, given the Chinese focus on developing jewellery manufacturing, the size of exports (perhaps it is misleading to suppose gold is not exported...) and the almost exponential growth of the internal jewellery market, could these and a sprinkle of false accounting explain such high imports? I appreciate this is not as 'sexy' but judging by their consumption of coloured gemstones and diamonds a lot of this gold is winding up in jewellery perhaps? An interesting corollary would be that China is not mining as much gold domestically as they claim. No gold exports.....someone forgot to tell these guys....and the ones selling plated gunk on alibaba. http://www.ebay.com/itm/Round-cut-8...177?pt=LH_DefaultDomain_0&hash=item4d3026e131 http://www.ebay.com/itm/SOLID-14K-Y...862?pt=LH_DefaultDomain_0&hash=item2a4e801756 http://www.ebay.com/itm/New-10K-Yel...101?pt=LH_DefaultDomain_0&hash=item5d4e7e1445 Interested in what the experts think......simply put China is spending a lot on making, exporting and selling bling so much it that the figures were just greater than the WGC calculations after all the receipts came in ? Given the Chinese also import gold and diamonds from e.g Zimbabwe it is not that surprising the figures might be out by e.g. 200 tons. That is apparently just the size of 10 Billion of falsified trades......
There is a quite simple topbottom approach without any need for original sources: if the China based stockpiling (note that I use this term instead of 'consuming', would be / would have been, X higher, then its influence on the gold price was overruled by others selling stockpile instead, as proved by the gold price trend. Central banks, as a global over all countries of the world, were and still are (2014 statement) net buyers, and a clear net seller were Gold Exchange Traded Funds. Let's now recap: this so called high "real" China based gold demand is used as an argument to promote buying gold. That, is already a plain wrong on its own. A speculator / anyone that buys gold when alot others also buy it, does so at a high price. The best moments to buy gold is when few buy it and lots sell it. The link from this recap to "Fooled" is a quick one. Sometimes, it helps to step back from all the claims and details you get lost in, and revert to the big picture. Despite its lower resolution, it can make things suddenly obvious, and in this case it renders that 'China Gold Demand' to a side story despite its often proclaimed as a main one. Then, about official sources, alike Thomson Reuters (the GFMS 'team' of it) and World Gold Council. I monitored alot of their data in recent years, and collected alot older data, going back decades. For a few years, I brought all data together, even average futures market positions, and also taking into account an average error correction measured over all years I have data for, and I didn't find mismatches. Using averages all the way, should lead to close match, and so it did. For silver, I found some quite serious mismatches (ie unexplained gaps, based on the fact, or should-be fact, that every sold ounce requires a bought ounce and vice versa. For silver, this was until recently classified as 'Implied Investment'. But as turned out (see another topic here), it was nothing but a blind assumption of what gaps explain. In later years, GFMS updated older data, and that had a red line: all revisions were downwards, and coupled to equivalent increases in the named supply/demand classes, clearly proving that that 'Implied Investment' was just missing data. Companies that didn't report it (in time for the 'survey'), upto even 6 years later. Golds case should be just the same. Why would it differ? Even governments apparently don't report in time if they buy or sell gold, as a recent proof-case of 2013Q1 showed, where a 386 tonnes government purchases was revised to 409 later on (Q2). Or, GFMS is asked to keep it silent until a date. A 20+ tonnes gold sale isn't exactly peanuts, and such amounts likely only trade within the bullion bank segment of the market at the heart of the price mechanism, of which it is hard to believe that major/core market analysts wouldn't be aware. But despite these discrepancies, the vast amount of the data that does match, gives little room for claims that this or that demand would be half, double or triple what is claimed. The World Gold Council, doesn't appear to me as a primary market data analyst. Just like SilverInstitute, they use Thomson Reuters data. In a past, there was a GoldInstitute, that was ceased to leave only the WGC. So essentially, ALL data that these companies/organisations publish, has passed through Thomson Reuters, which in turn gets it from bullion banks, central banks, and whoever that is big enough to be an important / much used pivot in the trading. So, if one claims that the world is fooled about gold demand, can he match, let alone 'do better' than Thomson Reuters, in the acquisition of data? What I see alot, is a figure here and a figure there, and by simply selecting what fits a desired picture, one draws it himself instead of reporting what others / all together say, as a total net result. Take for ex that value of imported diamonds. If the diamond price would be stable, then one can compare year A with B. But the imports are expressed in $. Carat, just like ounces, would give a more accurate comparison.
Thanks. I don't personally believe there is any deliberate deceit going on with supply and demand figures. Neither do I personally subscribe to the belief commonly cited that China is 'secretly' hoarding gold with the end aim being some momentous economic moment sometimes referred to as a currency reset or China and the other BRICS launching a gold backed reserve currency. This is one of these unfortunate myths that has become associated with gold buying conspiracy and doom mythology. The Chinese state has for some time being trying to create Chinese consumers who will provide domestic demand. In the case of jewellery it is exactly the kind of industry targeted under the 5 year plan focusing on moving from low skill mass production to high skill high quality. When I read this from a space outside the noise that dominates the gold commentaries (the gemtrade) " Many dealers at the 2013 Tucson gem shows reported a rebound in U.S. customer sales and a strong presence of Chinese buyers (Gemological Institute of America, 2013). They also noted dramatic price increases that were primarily due to Chinese consumption. In fact, several dealers pointed to problems replenishing their inventory. In the words of one U.S. colored stone dealer, "I went to a mine to buy rough, and a Chinese buyer had already been there and bought their production. When I returned six months later, the Chinese had purchased the mine."" Though China is hardly trying to secretly acquire gemstones for a gemstone backed currency That there is some perfidious concealment of the vastness of Chinese gold imports does not seem reasonable. I see a huge, huge, growth in both Chinese jewellery manufacturing and consumption. That is logical, why should the Chinese effect their trade balance by importing EU jewellery to full fill domestic demand when they can have their own luxury goods jewellery industry and also export apparently. The gemstone trade appears to indicate huge Chinese purchasing and investment. It stands to reason that they need gold and silver too and lots of it. It is quite interesting that Chinese gold production (supposed to be 500-500 tons?) may be overstated. This is a good thing for PM prices ultimately as a huge new consumer market for jewellery is growing exponentially but not because of any 'currency reset' or 'dollar collapse' or secretive Chinese government hoarding of bullion but simply that tends of millions of Chinese have moved from relative poverty to buying jewellery, in particular gold and diamonds. It is hardly surprising that measuring demand in an extremely fast growing market has inaccuracies. No mystery, no conspiracy and no radical epic economic event on the horizon that will send gold to the moon either.
They are so rich they can afford to buy lots of gold just in case. Instead of american dollars. Wouldn't you?
Source: www.wallpaperban.com OK I have my answers From the site here Mr. Jansen says in his analysis: The Mechanics Of The Chinese Gold Market https://www.bullionstar.com/blogs/koos-jansen/the-mechanics-of-the-chinese-gold-market/ "The Chinese Mint has an exception to export golden Panda coins and to my knowledge there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." But Wait! Source: pinimg.com http://www.gia.edu/gems-gemology/spring-2014-lucas-chinese-gem-industry "The significance of the "one China, two systems" policy governing mainland China and Hong Kong becomes clear when looking at China's jewelry exports by country. Although Hong Kong is part of China, it is also a free trade area and in an excellent position to serve as China's export center. In 2012, 88% of China's jewelry was exported to Hong Kong (figure 35, right), most of it for distribution in the global market." And finally http://www.researchinchina.com/Htmls/Report/2014/6879.html "In addition to meeting local demand, Mainland China also exports considerable jewelry. In 2013, it exported the jewelry with total value of USD49.06 billion, up 10.5% year on year. Hong Kong is a major destination, importing the jewelry worth USD41.97 billion (up 7.44% year on year) from Mainland China in 2013, and accounting for 86% of Mainland China's total export value." I cannot square the words in Mr. Jansens analysis "there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." with "Mainland China also exports considerable jewelry. In 2013, it exported the jewelry with total value of USD49.06 billion, up 10.5% year on year." Perhaps south park should have featured China in India's place... [youtube]http://www.youtube.com/watch?v=ebIlnwS_KIs[/youtube] (Just for you Pirocco....although the domestic market in China is also huge and growing). To sit back and ballpark these numbers at todays gold prices 49,060,000,000 USD in jewellery exports @USD 38,913,180.00 a metric tonne for gold gives 1260.755353327587 metric tons. Most of this is precious metal based: "Figure 36. Left: Diamond jewelry is the largest category of jewelry imported into China. Right: Precious metal jewelry and findings is the largest category of jewelry exported from China. Data from"2012 Import and Export Statistics of the Chinese Jewelry Industry" (2013)." Source: http://www.gia.edu/gems-gemology/spring-2014-lucas-chinese-gem-industry Now of course the bling, junk stones, silver etc can be shaved off and replaced by manufacturing costs, margin etc but either way Mr. Jansens analysis appears to be based critically on this flawed assumption "there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." - Mr Jansen (my bold) Which appears to be utterly incorrect. In fact China is a major jewellery exporter into the global market and of precious metal based items. I would like to invite Mr. Jansen to respond to my post if he is reading as I fully accept I may be making some base error and my contribution is in the spirit of peer review. It just looks like you are wrong Mr. Jansen and if indeed this is the case I hope you will consider withdrawing your article. I appreciate the ball parking is rough but it actually seems to amply square the numbers. Clearly you need to factor in Chinese jewellery exports for the sums to add up as they are far from ."insignificant". I note the site the OP linked to includes an article Spelling Out The Big Reset https://www.bullionstar.com/blogs/koos-jansen/guest-post-spelling-out-the-big-reset/ Also by Mr. Jansen which plays heavily on estimated Chinese gold reserves. I would like to know if the figures are based on gold import figures to China ignoring jewellery exports from China? "Plus, China has imported a lot of gold, so it could make references to the gold anchor in ways that are helpful to its aims. By this chart, the gold content within China's borders is more like 16,000 tonnes, twice as large as the largest official stockpile claimed by any single country (USA)." Mr. Jansen I find this personally implausible - but perhaps I am merely of limited understanding and need to be corrected. This seems to deliberately confuse the US Governmental holdings and compare it with *all* gold private and state held in China based on possibly spurious figures. It is not a like for like comparison and seems to me misleading. In the instance of the article originally linked to by the first poster, the hypothesis is invalid. Naturally this places some question marks over the hypothesis in the second article. I can't see with the Chinese government wasting their time refuting either article or indeed the CIA doing anything other than laughing at it. After all some people believe without cause that the US national gold reserve no longer exists because they have not been invited to view it. Further if Chinese domestic gold production is utilised in the Chinese jewellery manufacturing industry a percentage of it may actually be exported yearly.
http://www.worldstopexports.com/highest-value-chinese-export-products/1969 "Highest Value Chinese Export Products Below are the 20 highest value Chinese export products shipped from the People's Republic in 2013. Shown within brackets is the 8-digit harmonized tariff system code for each item. 1.Mobile computing devices: $110,792,725,000 (HTS code 84713000) 2.Cellphones and smartphones: $95,095,884,000 (85171210) 3.Computer processors and controllers: $37,474,635,000 (85423100) 4.Liquid crystal display panels: $28,731,558,000 (90138030) 5.Wireless phone handset parts: $35,541,232,000 (85177030) 6.Other computer parts and accessories: $25,046,512,000 (84733090) 7.Gold jewellery: $23,683,509,000 (71131919) 8.Other electronic integrated circuits: $17,894,412,000 (85423900) 9.Computer memories: $17,693,988,000 (85423200) 10.Footwear made with plastics: $14,734,843,000 (64029929) 11.Amplifiers: $14,659,426,000 (85423300) 12.Rigid disk drivers: $14,518,521,000 (84717010) 13.Microprocessors: $12,251,826,000 (84715040) 14.Other precious metal articles (non-technical use): $12,000,747,000 (71159090) 15.Knitted or crocheted jerseys and pullovers: $10,464,745,000 (61103000) 16.Television cameras (not for special purposes): $10,181,712,000 (85258013) 17.Solar cells: $10,150,759,000 (85414020) 18.Briefcases and satchels (plastic or textile covered): $9,852,933,000 (42021290) 19.Motorized bulk carrier vessels: $9,487,339,000 (89019041) 20.Aviation kerosene: $9,217,259,000 (27101911) China is also a world leader for a diverse range of non-computer related exports. These include gold jewellery, solar cells, shoes, briefcases, jerseys and even aircraft fuel. Among the items on the above list, 6 are among China's fastest-growing products over the past 5 years. Other precious metal articles (non-technical use) were up 73,824% while amplifiers increased 2,173%. Gold jewellery moved ahead 2,057%." That's 40- 50 billion odd in PM exports and 23 billion odd in gold jewellery. Note solar is listed separately....and LCDs...and mobile and all those gold plated connectors in the 13 and 9 for example. Wonder which export classification gold plated Iphones fall into? However.... From the site here Mr. Jansen says in his analysis: The Mechanics Of The Chinese Gold Market https://www.bullionstar.com/blogs/koos-jansen/the-mechanics-of-the-chinese-gold-market/ "The Chinese Mint has an exception to export golden Panda coins and to my knowledge there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." And China is actually the number one jewellery exporter in the world in 2013 and the vast majority of that is gold something like 29% of total global jewellery exports are Chinese. I don't understand why you are saying that this is an insignificant tonnage Mr. Jensen. Am I missing something? Chinese Jewellery exports increased 25% for example in 2006. This export of gold jewellery from China has been increasing along with domestic demand. I'm not a professional analyst like you but this appears to account for all Chinese gold imports and perhaps even Chinas gold production when combined with Chinese domestic consumer demand. If this is the case then China really has not been stockpiling gold at all beyond a little marginal stacking and the figures from the Chinese government may well be right which in 2009 were 1054 tons or about 1% of foreign reserves. After all this puts them 5th in the world. So no gold backed Yuan then - more hot air in the conspiracy laden goldsphere but then the Chinese never claimed otherwise. Maybe they will be up to 1500 tons the next time they bother to tell anyone. I can't see where the whole China is/has been stockpiling gold thing comes from. The real good news for gold prices from China would seem to be the the robust domestic gold jewellery demand but I can't see any such indicators of a move to the fantastic economic hiatus of a partially gold backed Yuan at all by the Chinese that Mr. Jensen writes about in his articles. I am not a professional analyst though so stand ready to be corrected. Please let me know what is going on here Mr.Jensen. I don't understand how jewellery exports don't feature more in your analysis. Looks like the Chinese would not have much left to stockpile after their exports and domestic consumer sales. IF you explain it I will get someone to buy some gold for me from your website. Please no documents in Chinese though. They add mystery but no clarity. In fairness Pirocco was saying this too and is quite correct it seems. I just like details. It is disturbing that the link to this article is listed on so many websites. Indeed it features in a zero-hedge article here http://www.zerohedge.com/news/2015-03-09/how-world-being-fooled-about-chinese-gold-demand [youtube]http://www.youtube.com/watch?v=ru4glg0RJxA[/youtube]
The amount of fine ounces of gold actually in the jewellery and other articles is hard to determine because you have to subtract manufacturer profit, value of other components (eq diamonds) etc. You can't just divide the export value by the gold price. Unfortunately I don't have any handle on what % of those categories' value is pure gold.
@ oldsoul Please read this post for details on Chinese gold trade https://www.bullionstar.com/blogs/koos-jansen/chinese-gold-financing-deals-explained/ China imports and exports a lot of gold in PROCESSING TRADE (can include round tripping) done in Free Trade Zones, for which no "PBOC trade license is required". Jewelry export is all done through PROCESSING TRADE, this gold is sourced from abroad. In GENERAL TRADE 15 commercial banks are allowed to import gold in THE DOMESTIC CHINESE GOLD MARKET (SGE SYSTEM). This quote ... "The Chinese Mint has an exception to export golden Panda coins and to my knowledge there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." ... is about GENERAL TRADE (hence my reference to the Chinese domestic gold market). In China FTZs are separated from the domestic gold market. Sorry, I will not withdraw my articles ;P Also consider reading this https://www.bullionstar.com/blogs/koos-jansen/confirmation-pboc-doesnt-purchase-gold-sge/ on PBOC purchases and the SGE. I'm planning to write a new post on the PBOC and gold, to sum up every clue we have on their activities. Btw, when did I ever write China is gonna back to yuan with gold? this post https://www.bullionstar.com/blogs/koos-jansen/guest-post-spelling-out-the-big-reset/ is a GUEST POST (not written by me) LATEST UPDATE: I made a typo, please re-read. #mrtypo
Mr Suchecki. 100% agree. Note however that a large percentage of the Chinese jewellery exports are classified as gold jewellery. The aim was not to define an exact figure but to just illustrate that Chinese gold exports appear to quite reasonably when combined with recognised domestic consumer demand equal more or less the WGC import figures and Chinese domestic production and that a great deal of the imported gold and is actually re-exported. Further that the Chinese domestic demand is solidly grounded in what plainly appears to be an increase in the domestic Chinese jewellery market that parallels a massive increase in Chinese jewellery manufacturing and export and not state hoarding/stockpiling. If the total of gold jewellery, non jewellery precious metal exports and other exports gold content combined could when added to domestic consumer demand balance against Chinese domestic production and import - then the popular myth of China secretly massively increasing the gold % of foreign reserves based on such figures is nonsense (although they may be increasing somewhat). As you are aware there a huge number of sites, analysts and articles claiming this is true and that it has geopolitical significance and is a reason to buy gold. The zero hedge article I reference is a good example and it cites Mr. Jensen repeatedly in the context of a 'global currency reset' a subject Mr. Jensen has also written a speculative article on. Thank you for replying. I also appreciate Mr. Jensens courtesy in replying and will examine closely what he says in reply in another post as I cannot yet reconcile his reply with what I have so far read and observed.
Greetings Mr Jensen and thank you for the opportunity to dissect the subject of Chinese gold reserves which as you know have been the subject of a great deal of speculation following Chinas 2009 announcement which indicated an increase from 600 tons in 2003 to 1054 tons in 2009. Financial Times: China reveals big rise in gold reserves http://www.ft.com/cms/s/0/1d23f80c-30aa-11de-bc38-00144feabdc0.html Since that announcement in 2009 there have been a great number of articles and analysis speculating on the increase in the percentage of gold China is holding in its foreign reserves many of which as you and most followers of the gold market choose to link these reserves with the idea that China is 'scheming' to substantially back its currency or leverage its negotiation position in relation to SDRs with gold and will someday make a 'surprise announcement' that China is in fact holding massive gold reserves. For example in your article When Will China Disclose Its True Official Gold Reserves And How Much Is It? https://www.bullionstar.com/blogs/k...ue-official-gold-reserves-and-how-much-is-it/ You state "China is forced to buy in secret." It is not clear to me why China should be forced to buy in secret if it wished to augment it's gold reserves. Gold is after all mined domestically in China and it would seem sensible of the Chinese authorities utilised a percentage of that source to add to their gold reserves rather than importing it. Why do this? It is simply better for Chinas balance of trade to utilise internal production rather than import gold for the purpose of adding to their reserves. However this obvious source for the 2003-2009 increase in Chinas gold reserves is not considered in your article, rather you state "China is forced to buy in secret. The latest update on the size of their official gold pile was in April 2009, when they disclosed to have 1,054 tonnes, up 454 tonnes from 600 tonnes, which they claimed to have since 2003. Common sense indicates the PBOC did not buy 454 tonnes in a few months; most likely they bought this amount in secret spread over six years (2003 2009). More common sense suggests they continued to buy in secret since 2009 and they hold at least twice the weight they currently claim." (I added the bold typeface). The emphasis in your article is that gold is being secretly added and purchased to add to Chinese national gold reserves. It would seem far more logical that the increase in Chinas gold reserves was not imported gold at all but domestically mined gold. This is not considered by you. The use of the word 'secret' repeatedly adds as I'm sure you are aware a somewhat conspiratorial element to your analysis, implying that their are great unknowns to be speculated on. You mention you did not in fact author the article that is posted on your site Spelling Out The Big Reset https://www.bullionstar.com/blogs/koos-jansen/guest-post-spelling-out-the-big-reset/ However as is obvious you clearly endorsed it by posting it on your site. Both your name and photograph are displayed prominently above it. Do you repudiate or disagree with this article? In this article the following is stated "Plus, China has imported a lot of gold, so it could make references to the gold anchor in ways that are helpful to its aims. By this chart, the gold content within China's borders is more like 16,000 tonnes, twice as large as the largest official stockpile claimed by any single country (USA)." With the referenced chart prominently displaying your apparent employer and the website host 'Bullionstar.com's logo. Now this quote - while clearly accepting the us treasury owned gold figures (8133 metric tons) Status Report of U.S. Treasury-Owned Gold http://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm Inflates Chinas national gold reserve massively to 16000 tons that it may appear double that of the United States. This is despite the 2009 Chinese government announcement of the figure of 1054 tons in 2009. However this comparison is made between US treasury held gold and to quote the author 'the gold content within Chinas borders'. This is an utterly spurious comparison. Even if one wished to make such a comparison it would be between all gold in US borders and all gold in Chinese borders. Obviously the quantity of gold in the USA including privately owned etc. is vastly greater than 8000 tons even by just including private holdings. I think you can understand why such a jarringly incorrect statement creates an impression of deliberate misrepresentation of facts in order to support an argument that China is seeking to exercise influence over the SDR mechanisms at some point due to the quantity of gold they hold in reserve. I have carefully considered your articles and your comment above However this in no way substantiates your opinion as you recognise repeatedly in your articles that in fact Jewellery manufactures act as conduit for gold from general trade to prduction and that Jewellery manufactures are in fact authorised by the Chinese government to do this. As mentioned above you refer to this in your article The Mechanics Of The Chinese Gold Market https://www.bullionstar.com/blogs/koos-jansen/the-mechanics-of-the-chinese-gold-market/ "The Chinese Mint has an exception to export golden Panda coins and to my knowledge there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." I'd like to again go back to jewellery and its apparent importance in import and export. It is classified separately from gold bullion under customs and tariff codes. Here is a rather good analysis of Hong Kong's jewellery exports http://hong-kong-economy-research.h...in-Hong-Kong/hkip/en/1/1X000000/1X001DFI.htm# " Hong Kong's jewellery industry can be broadly classified into two sectors: jewellery made of precious metal and imitation jewellery. In terms of value, 87.6% of Hong Kong's total exports of jewellery are made of precious material. " Source:hong-kong-economy-research.hktdc.com (Hong Kong jewellery exports by destination) In this analysis we see that the EU/US/Switzerland/UAE/Others Account for the vast bulk of these exports. In fact the US imports 29% of Hong Kong precious metal jewellery exports alone. Now this analysis states the following "In China, all gold trading at the wholesale level for producers and wholesalers now takes place in the Shanghai Gold Exchange, introducing market prices to the transactions. In 2004, China removed all barriers to gold licensing for manufacture, distribution and retail of gold jewellery products, and allowed some mainland companies to import gold jewellery. In August 2010, China announced to let more banks import and export gold, open trading further to foreign companies, increase foreign members on the Shanghai Gold Exchange, and also study ways to allow foreign qualified bullion suppliers to deliver to the exchange." And again here in commentary on Chinas jewellery market China's jewellery market http://china-trade-research.hktdc.c...wellery-market/ccm/en/1/1X000000/1X002MMK.htm "6.Since May 2003, the mainland has abolished the licensing system for running businesses in gold and silver products. As a result, the production, processing, wholesale and retail of jewellery are under total market management. Anyone can register as a natural person to operate a business in jewellery production, processing and wholesaling." This contrasts with your statement The Mechanics Of The Chinese Gold Market https://www.bullionstar.com/blogs/koos-jansen/the-mechanics-of-the-chinese-gold-market/ "The Chinese Mint has an exception to export golden Panda coins and to my knowledge there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market, but this tonnage is insignificant." It is difficult to produce (not process...) precious metal based jewellery without using gold. Now there is undoubtedly a large flow of gold to China and Hong Kong which is bullion import. Jewellery is classified separately in tariffs to bullion (though in the case of both Hong Kong and China the vast majority of jewellery exports are recorded as precious metal based). There are equally huge exports of precious metals based jewellery from both Hong Kong and almost exponentially from China. Perhaps you could close the matter by quantifying in your estimation the amount of bullion imported into or produced in China that forms part of the WGC figures that is used to make jewellery. You state this tonnage is 'insignificant' but I would like to know how you reach this conclusion. Secondly could you square your comment that " there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market" with the statements in the analysis above that since 2003/2004 the Chinese mainland "abolished liscencing restrictions for jewellery production"? Simply put if gold is imported into what is defined in your analysis as 'the domestic gold market' it would appear that jewellery manufacturers in that domestic gold market are free to purchase bullion and produce (not process) jewellery for domestic consumption and most critically export virtually without restriction. If this is the case than any analysis seeking to make claim to China stockpiling gold at a governmental level in extraordinary quantities without taking account of this avenue for gold to then leave China and to quantify the volume of gold leaving as jewellery is fundamentally flawed due to the daunting size and value of this export segment of China and Hong Kongs economy. It is interesting to note that the immense increase in the flow of both Diamonds and coloured gemstones to China in parallel with the rise in Gold bullion imports would seem to substantiate that much of this gold is being utilised in Jewellery manufacture for both export and the rising Chinese consumer market for Jewellery. Why then should it be believed that Chinas gold imports have any relevance in the matter of 'currency wars', 'global resets' etc. Rather they seem to point to what the world already knows - that the Chinese import raw materials and manufacture goods for export. While humorous the South Park model of the flow of gold globally may in fact be extremely apt in the case of China despite the increased domestic consumer demand for gold. Neither is it surprising that the Chinese government would wish to stimulate domestic demand for a domestically produced raw material and manufactured product. The fact that Chinese women are finally getting to adorn themselves with bling and that cheap gold jewellery is exported from China to the US and EU is however in its own hardly indicative of a brewing geopolitical storm ahead with gold a significant factor. It is rather bland and unappealing to the 'doomer' community but nonetheless may actually be far nearer the truth than 'Beware the Chinese and their mountain of secretly bought gold'
gold (and jewelry) flows in and out of china through free trade zones (not the domestic market) are called PROCESSING TRADE. If you have a jewelry company in a free trade zone you can import bullion and export jewelry. (this gold is not allowed to enter the domestic market without PBOC approval) gold imported into the domestic market is done by 15 banks and is called GENERAL TRADE. In general trade gold is not allowed to be exported, except... "The Chinese Mint has an exception to export golden Panda coins [in GENERAL TRADE] and to my knowledge there are also a couple jewelry companies that are allowed to trade non-standard gold (jewelry) in and out of the Chinese domestic market [in GENERAL TRADE], but this tonnage is insignificant." Sorry I have no time to write endless posts here to you.
