Lawrence Williams: Hong Kong-China gold exports weak again, but does it matter?

Reported Hong Kong net exports of gold to mainland China were again at an extremely low level in August at a mere 21.1 tonnes.  In previous years the Hong Kong figures have been taken by global gold analysts as something of a proxy for total Chinese gold imports, even though gold was known to have entered the Chinese mainland by other routes, but this had been assumed to be in relatively insignificant quantities.  This year, though, China has eased the path to passage of gold through other ports of entry – notably Shanghai and Beijing – for which no data is forthcoming and given that this easing coincides with the apparent downturn in the Hong Kong figures, it could well be the case that imports via these alternative routes have been replacing gold which had previously come in via Hong Kong.
On the face of things, if one takes the Hong Kong figures for net gold exports to China alone (see table below), Chinese demand appears to have fallen by a massive 33% this year from 725 tonnes to 485 tonnes.  But this is belied by figures for withdrawals from the Shanghai Gold Exchange which are only down by around half this percentage, and which have been particularly strong in the past few weeks.  This has also coincided with price premiums over the London gold price again appearing in Shanghai.

This post was published at Mineweb