e Bloomberg figures for China are based on gold imports through Hong Kong and China’s own production, whereas gold is also imported through other points of entry.
Meanwhile Bloomberg calculates global new mined gold output at some 7.44 million ounces a month making for a deficit of 0.56 million ounces a month.
Now the above figures would have been prepared before the latest April figures for China’s gold imports from Hong Kong showing a fall both month on month and year on year – although following exceptionally strong January and February figures.
Bloomberg analysts also predict that global gold output will fall around 1% this year, and should Indian demand return in strength should the new Modi government relax the current import restrictions, as many expect, the deficit in the fundamental supply/demand position for gold could be significant. While scrap sales of gold provide a lot of the balance – and have at times put the fundamental market into surplus, these are far lower at the lower gold prices being experienced at the moment.
Of course one of the big unknowns is whether China has been building its own gold reserves without reporting this to the IMF. Under Chinese logic this can be achieved by putting this gold into a separate account from its announced forex holdings and thus not having to report it. Bloomberg takes a calculated guess that it has indeed been building gold reserves and these are now likely to be nearer 3,000 tonnes plus than the reported 1,054 tonnes – the official level for the past five years. The suggestion is that the Chinese central bank continues to accumulate gold.
Overall, Hoffman commented that Chinese and Indian attitudes towards gold are very different from many investors and traders in the West and that people in those two nations understand the value of gold which is seen as having protected its holders from financial downturns for hundreds of years. He also pointed to Chinese’s longterm view, with Chinese state-owned companies investing in overseas gold mining projects, as they have been for copper, seeing these two metals as key to the future of the country’s economy.
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