Gold news - October 9 , 2013 - Big news of the day is the relentless importation of gold by China . Data for August reveals 300 tons of gold imported into Hong Kong with another 110 tons into the Chinese mainland ! Even more interesting , note US and Switzerland were the two largest exporters of gold to Hong Kong . If China and India imports represent 90 percent of world production and with other central banks also buying gold , is there any surprise we have seen World Bank data reflecting the incredible shrinkage of western physical gold - but where is the gold coming from to meet that demand from non Chinese and Indian Central Banks ?

http://www.caseyresearch.com/gsd/edition/china-imports-110-tonnes-of-gold-through-hong-kong-in-august

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The big news yesterday were the August gold import numbers for China.  Here are the updated charts courtesy of Nick Laird over at sharelynx.com.  The first one shows the monthly import data, and the second one is the yearly import data, with the bar for 2013 representing year-to-date imports.

If they keep up this pace, China will import around 1,200 tonnes of gold through Hong Kong in 2013, which represents about half of all the gold that will be mined this year.  And those are the gold imports we know about, plus they absorb the 400+ tonnes a year of their own mine production on top of that.

Along with Indian imports, these two countries on their own will absorb about 90% of world mine production this year.  This prima facie data begs the question:  What central bank vaults are providing the physical gold demanded by every other country on Planet Earth this year?

http://seekingalpha.com/article/1736132-u-s-switzerland-export-largest-ever-amounts-of-gold-to-hong-kong-and-investors-should-take-note?source=yahoo

Chinese gold import data have just been released for August, and it shows that imports are still very strong. But what investors should really take note of is that imports into Hong Kong were close to 300 tonnes in August - which would put them on pace to suck up all of global mine supply.

(click to enlarge)

Net imports into the Chinese Mainland, after deducting flows from China into Hong Kong, were 110.5 tonnes, down slightly from the close to 120 tonnes a month earlier. Mainland buyers purchased 131.4 tons in the month, including scrap, compared with 129.2 tons in July, data today from the Hong Kong government show. In terms of year-over-year changes, Chinese mainland buyers purchased 53.5 tonnes last year, which means that gold purchases more than doubled - which is clearly shown in the chart above.

But what is really interesting is that Hong Kong imports of gold increased to 297 tonnes - which is the largest amount of gold imports on record as investors can see in the chart below.

(click to enlarge)

If these 297 tonnes are extrapolated over one year, they would be equivalent to 3600 tonnes of gold or significantly higher than all of world gold mine production - that is a staggering amount of gold being imported into Hong Kong.

Digging a little deeper we find that the two countries that exported the most gold to Hong Kong during the August period were the United States and Switzerland.

(click to enlarge)

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http://www.business-standard.com/article/markets/gold-refineries-shutting-bulk-operations-113100900783_1.html

India’s gold refineries are operating, says the trade, at only 25 per cent of installed capacity due to acute shortage of used jewellery.

“There was no gold import in the last two months. Hence, the domestic demand, albeit weak, was met only through existing inventory and recycled gold. But with the stagnation in gold price, scrap sales have declined dramatically in the last few weeks, posing a threat for refineries,” said James Jose, vice-president of the Association of Gold Refineries and Mint, and managing director of Chemmanur Gold Refinery.

Supply through recycling of used gold declined to around 10 tonnes in the second quarter of the current calendar year. In the third quarter,  supply through used gold is estimated to be further down, resulting in lower availability of scrap for recycling.

Refineries will have to shift to processing of dore, the cast bar from the first stage of gold purification; it is about 90 per cent gold. The government liberalised dore (pronounced do-ray) import early this year and this has become more economical than buying pure gold from foreign refineries. However, procedural hurdles have meant refineries have not shown much interest in importing dore. A licnece to do so is needed from the directorate general of foreign trade. Refineries will, however, have to shift to doing so, said Jose.

“The government since the beginning of this year has taken several steps to curb gold import, resulting in lower availability of virgin gold. In addition to increasing the import duty to 10 per cent, it mandated a minimum 20 per cent of imported quantity to supply jewellery exporters. This has created an impression in the minds of consumers that gold supply will remain under severe stress. Consequently, consumers currently abstain from disposing gold jewellery, resulting in reduced supply of used gold. The trend is likely to continue in the fourth quarter as well,” said Somasundaram PR, managing director (India) of the World Gold Council.

Normally, scrap supply goes up in a free market. Since the government has put a curb on gold import, supply of virgin metal will remain under stress, translating to similar stress on scrap sales. Consumers will hold gold ornaments, assuming further supply tightening might create a real shortage of the yellow metal.

“Lots of consumers are currently focusing more on exchange of gold ornaments than purchasing all-new items. A small portion of the exchanged ornaments, especially the hallmarked ones, come back for direct sales after polishing; the larger portion still goes for melting in refineries. But sales of used gold remain low due to stagnation in prices,” said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation.

Overall consumer sentiment is weak in the jewellery markets. For a recovery in sales of ornaments and re-sale as scrap, the sentiment has to improve through proper policy support from the government, said Soni.

“Gold refineries are on the verge of closure due to non-availability of used jewellery. Melting of jewellery scrap to convert into 24-carat gold has, therefore, become a loss-making process and operational capacity has declined to an alarmingly low level,” said Harmesh Arora, managing director of NIBR Bullion.

TF Metals Report: Goldman buys gold after panicking speculators to sell

Submitted by cpowell on Wed, 2013-10-09 09:17. Section: Daily Dispatches

5:14p ChST Wednesday, October 9, 2013

Dear Friend of GATA and Gold:

Turd Ferguson of the TF Metals Report goes into the fine print of market reports and finds that Goldman Sachs is buying gold whenever it helps to panic speculators into selling it:

http://www.tfmetalsreport.com/blog/5131/paging-dr-crane

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

http://truthingold.blogspot.com/2013/10/will-real-goldman-sachs-view-on-gold.html

WEDNESDAY, OCTOBER 9, 2013

Will The Real Goldman Sachs View On Gold Please Stand Up

The head of Goldman Sachs' commodities research area yesterday announced in headline-grabbing fashion that gold was a "slam dunk" sell.  What's truly stunning about this is that during the 2nd quarter this year, Goldman Sachs revealed in an SEC 13-F filing that it had accumulated over 4 million shares of GLD (that's half a billion dollars worth) of GLD to become the 6th largest holder.

True to its historical track record, Goldman often says one thing through its research reports but does the exact opposite with its capital.  I've written an article published by Seeking Alpha which compares the Goldman's "sell" report, which has no basis in factual analysis, with a list of fundamental factors that point to the reasons that Goldman is saying one thing but doing the exact opposite with its capital.  You can read my article here:  Follow The Money

But before you read that, consider this accounting from www.goldcore.com of the last time Goldman issued a highly publicized "sell" on gold back in 2007:

It is worth remembering that Goldman, to much fanfare and media attention, “told clients” in November 2007, to sell gold. On November 29, 2007, Goldman recommended that investors sell gold in 2008 and it named the strategy as one of its ‘Top 10 Tips’ for the year.

Gold subsequently rose nearly 6.4% in December 2007 alone - from $783.75/oz to $833.92/oz.

Gold then rose another 5.8% in 2008 - from $833.92/oz at the close on December 31, 2007, to close at $882.05/oz on December 31, 2008.

Gold rose 12.2% in the 13 months after Goldman's sell gold call. Gold then rose 23.4% in 2009, 27.1% in 2010, 10.1% in 2011 and 7% in 2012.

Thus, proving Goldman’s ‘Top Tip’ prediction absolutely wrong and costing their clients and many of the unsuspecting public a lot of money in the process.

At the time, Goldman cut its gold forecast to $740/oz from $810/oz on a 12 month basis. One year later, gold closed at $882.05/oz - more than 19% above Goldman’s ‘forecast’.

The crystal ball gazing of Wall Street banks and hedge funds and others who have suggested gold is a bubble in recent years has cost many of the investment public dearly.

As ever, it remains wise to ignore the considerable noise that emanates from Wall Street and maintain a healthy, long term allocation to physical gold.