China May Be Importing Much More Gold Than Is Being Reported

By Dave Kranzler
Investment Research Dynamics / Seeking Alpha

chinfrogIt’s being widely reported that China’s gold imports so far this year are down from its record level of imports in 2013, with lower imports being attributed to this year’s decline in the yuan vs. the dollar. However, I will present several reasons why generally published and accepted western reports of China’s gold import activity are unreliable and that China’s true level of gold demand is significantly higher than is commonly accepted or known outside of China. Because of this “shadow” physical demand in China, I believe that the expected seasonal July/early August sell-off in the price of gold will not only be muted but there might be an unexpected move higher.

In February this year, the World Gold Council published its annual global gold demand report. It reported that China had imported 1,066 tonnes in 2013: World Gold Council Global Gold Demand (see pg. 4). However, the World Gold Council data only picks up the data for gold entering China via Hong Kong and this only captures a portion of China’s total demand for gold. In fact, China’s total demand for gold in 2013 was 2,197 tonnes. This number is derived from the total amount of gold withdrawn from the Shanghai Gold Exchange in 2013.

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