These charts are getting less and less important as the SGEI has recently opened up. We are seeing that the Hong Kong to China gold transport isn’t so hot anymore as it was in the past.
The only things left were Krugerrands and U.S. Liberty coins (American Eagles), which only have 92% gold in it.
Not only here in Hong Kong, but at the U.S. Mint also, we see that gold demand is very high. In just the first week of November they bought half the gold coin volume (30500 ounces) of the previous month (67500 ounces).
Last week Shanghai deliveries went up to 60 tonnes a week again, going above mine supply. A week later gold was smashed to $1150/ounce. So I expect deliveries are going even higher.
Yesterday, I strolled through the cities of Hong Kong and I saw an increase in customers at the gold retailer shops like Chow Sang Sang and Chow Tai Fook. They were definitively aware of the smash in gold and went buying like real professionals.
Then we went shopping in Mong Kok, I did come across some more protesters. Again evidence that all is well, they were very peaceful. I expected more excitement.
What they also had are these weird 5 tael bars of 0.99 gold. That’s around 7 ounces of gold. Gold bars with 1% impurity. They said I shouldn’t buy those when taking them back to Belgium as they wouldn’t recognize them as gold.
Later on I found out that there were delays of one month to get maple leafs, Perth mint sales and U.S. Mint sales are exploding.
Next on I went to a retail gold shop Luk Fook to look at what they have in store. When I went in, they shoved some golden rings under my nose and I quickly saw the premiums were in the 20%. Not exactly what I was looking for. But you can also buy 1 tael gold rings which have a normal premium of around 5%.
It’s amazing how many gold shops there are in Hong Kong. Just walk along and you can buy gold anywhere you go.
Instead, I’m going to buy some physical gold while I’m here. Currently I’m sitting in the Bank of China tower for some business activities. The security here is pretty good. I need to hand over my identity card to get a visitor pass. There is also security screening when you are carrying any bags.
Yesterday, completely unrelated to economics, I attended a concert at a protestant Church in Hong Kong. This guzheng talent was pretty amazing.
I don’t know of any other channels, maybe Beijing…
The gold imports in May 2013 were a bit disappointing again, gross imports didn’t budge much.
But the net imports surged to 106 tonnes in May 2013, meaning that China kept all the imports from Hong Kong. The ratio of net imports to gross imports is 83%.
But it’s still a positive development for the gold market, net imports continue to trend higher.
As predicted here, China bought gold like there was no tomorrow in December 2012 as gold prices fell to a record low. They bought 114.4 tonnes. I believe January will be a good month too.
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| Chart 1: China Gold Imports from Hong Kong |
Net imports were 84.7 tonnes. That’s 84.7/114.4 = 74%. That’s a record high, even higher than the 68% in November 2012. This means China isn’t even trying to export its gold to Hong Kong anymore. It’s scooping up all the gold they produce!
I say: “Follow the money!”
Correlation Economics (Backup) 