Was 2013 China's Golden Year?

WAS 2013 CHINA'S GOLDEN YEAR? Whilst the spot gold price dropped 28% in 2013, China's gold market exploded into life and grabbed media attention all over the world. Scroll down to see what China's incredible gold consumption numbers mean for the global economy. GOLD AND SILVER COIN DEMAND SURGES 37 tonnes of gold coins were minted in China in 2013, making China the second largest coin buyer after Turkey. Chinese buying represented 15% of global coin demand. 10 million silver pandas were minted in 2013, a 25% increase on the 2012. The one troy ounce silver panda was the most popular silver coin in China. 10 8.4 million gold pandas were minted, the most popular being 1/20 and 1/10 troy ounce coins. $500 2014 is the Year of the Horse which should mean even bigger demand after the year of the snake and its bad omens in 2013. CHINA DOMINATES GLOBAL GOLD MINING In 2013 China was expected to mine 428.16 tonnes of gold, up 10% from the previous year. XXXN XXXXX XXX China's mining companies also own mines all over the world and spent much of 2013 buying them up as investments, from Kyrgyzstan to Brazil. According to Chinese media, takeovers and asset purchases by producers based in both Hong Kong and China reached $2.24 billion in the year to August 2013, nearly $1 billion more than the previous year. WHAT THE CHINESE POWER BROKERS SAID ABOUT GOLD "China should increase its gold reserves appropriately, and China must take every chance to buy, especially when gold prices fall." Li Yining, the heavyweight influencing economic thought. "China should use its foreign-currency reserves, the world's largest, to buy gold and oil as a hedge to guard against the risk of a sudden drop in the US dollar." Yu Yongding, a government adviser and former member of the PBOC. "From the perspective of the central bank, the development and improvement of the gold market will acilitate the improvement of regulating instruments for monetary policy and macro adjustment system. On the one hand, gold still bears the marked nature of money under the modern financial system." Zhou Xiaochuan, Governor of the PBOC, i.e. the man running the show. "The US owes Germany so much gold but instead of repaying immediately, sets a 2020 deadline to refurn the gold. From this example and process as well as some typical factors, this is a downright currency war to maintain US Dollar hegemony by defeating all other currencies. I shall stop here." Sun Zhaoxue, CEO of China Gold. CHINA DID NOT OVERTHROW INDIA IN 2013 2013 is oft cited as the year that China took over India as the world's largest gold consumer. However, expert gold analyst Koos Jansen found new data from inside China showing India being overtaken in 2011, two years before analysts got into a frenzy about China's gold import numbers. INDIA CHINA DID CHINA REVEAL ITS ACTUAL GOLD RESERVES? No! After much confusion amongst analysts, it turns out China has not given an update regarding its official reserve numbers since 2009, when it reported 1,054.10 tonnes. What the experts say: 'In April 2014, China will report gold reserves of 5,000 tonnes'. Jim Rickards, author of Currency Wars 'If the State Council has followed the CGA's 2012 recommendation then the PBOC should currently hold between 2,947.2 tonnes and 3,332.4 tonnes of gold in reserve'. Jan Skoyles, Head of Research - The Real Asset Company '2,710 metric tonnes'. Andrew Cosgrove and Kenneth Hoffman, Bloomberg Industries '2,710 tonnes as of the end of 2013'. Jeffrey Nichols, American Precious Metals Advisors WHITE HOT BUYING AT THE SHANGHAI GOLD EXCHANGE The SGE was the poster child of the Chinese Gold market in 2013. Withdrawal by individuals hit 2,197 tonnes whilst 'total demand including PBOC purchases may have reached well over 2,500 tonnes' Koos Jansen. 91% more gold was withdrawn to Chinese household than in 2012. Demand was so hot that SGE prices averaged 1.2% more than the international spot gold price, with an average of 41.94 tonnes being withdrawn each week in 2013. CHINA'S GOLD MARKET GROWS AND MATURES August 2013 Acquisitions by China's gold mining companies reaches $2.24 billion as China's global gold grab gets even hotter. Domestic gold demand estimated to be 4 tonnes per day as China continues to turn heads in the gold market. July 2013 World Gold Council note change in Chinese gold investment, noting individual investors opportunistically buying gold when price is low. China's first two gold-backed ETFS are launched signalling further maturing of China's gold investment products. June 2013 China Gold Association estimates private gold holdings of 5g per capita, citing 'huge potential for future growith in gold ownership. SGE's supply into domestic market rises to a staggering 1,098 tonnes, representing >25% of global gold supply and 94% more than in 2012. April 2013 In third week of April SGE deliveries reaches 17 tonnes, 30 tonnes more than Western banks bought in 2012. IS SHFE BECOMING THE NEXT CENTRE OF GOLD PRICE DISCOVERY? d. 1. J... The launch of night trading and entry of foreign firms help increase liquidity within gold futures trading in China. The SHFE moves to take on London and COMEX in New York as price setting hubs. Delivery ratios remain lower on SHFE compared to COMEX demonstrating the different uses for the SGE and the SHFE. Average cover ratio on SHFE is 0.37%, far less than the 4.8% low point of COMEX. WHERE TO FIND THE BUZZ ON TWITTER? A handful of thought leaders on Twitter helped spread China gold news around the social media community. We think these Twitter users are well worth a follow! 1) Max Keiser, the financial war correspondent and journalist can be followed via @maxkeiser, whilst his evermore popular show on RT tweets at @KeiserReport. 2) MineWeb, the resource and precious metals magazine, has always been an early bird when it comes to breaking gold news and they can be found via @Mineweb. 3) ZeroHedge, the Wikileaks of the financial world, has hundreds of thousands of global metals investors following @zerohedge. 4) Silver Doctors, prominent bloggers and commentators around the precious metals, always get the inside track on gold and silver news and enlighten their followers via @SilverDoctors. Got any follow recommendations of your own? Tell us on Twitter via @therealassetco. HOW THE MEDIA COVERED CHINA'S GREAT GOLD RUSH As China's gold demand took to a new level in 2013, the media were quick to take up the story. For the first time, a wide range of news services covered SGE deliveries and premiums as well as supply and Hong Kong exports. However, rarely was the demand for gold from China questioned, instead it was portrayed as a traditional and almost provincial approach to investment. "China Gold Imports From Hong Kong Climb to Record on Wealth." February 2013, Feiwen Rong, Bloomberg "China Goes Gold Crazy. Why Now?" April 2013, Gordon G. Chang, Forbes "China's Consumers Show Growing Influence in Gold Market." August 2013, Chuin-Wei Yap, WSJ "Gold pours into China to meet record demand, bypasses Hong Kong." November 2013, A. Ananthalakshmi, Reuters "State buying may explain China's gold import surge." December 2013, Neil Hume and Xan Rice, FT WHERE DID IT ALL COME FROM? "The most significant parameter to measure the gold distribution from West to East is the trade vein that runs from the UK through Switzerland through Hong Kong, eventually reaching Shanghai." Koos Jansen. China imported about 1,158.16 tonnes from Hong Kong, compared with 557.48 tonnes in 2012. UK gold exports to Switzerland surged ten-fold, with 1,199 tonnes exported from January-Oct 2013. Some of the World's largest gold ETFS store bullion in London. Globally, 869.1 tonnes of gold ETF outflows were seen in 2013. "Seventy per cent of a Swiss refinery's fabrication is going to China, at a pace of 10 tonnes a week. That's from one refinery, now remember there are four of these big refineries in Switzerland..." Alex Stanczyk, Chief Market Strategist for Anglo Far-East. WHAT DOES THIS MEAN FOR THE INTERNATIONAL GOLD MARKET? - COMEX facing growing competition from the SHFE. - Physical gold shortages could become a reality - Physical gold demand wll play a growing role in price discovery. - The prominence of the retail consumer is set to grow in the international gold market. Love our infographics? Follow us on Twitter to get them hot off the press and learn more about gold, silver, crypto-currencies and money itself. @therealassetco THE REAL ASSET CO © copyright 2014