Gold Around the World

Gold Demand Around the World

Gold is in great demand around the world, but not in the United States.

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Gold is big news around the world. Russia made its largest monthly gold purchase in September in 14 years; in Switzerland, a populist referendum, Save Our Swiss Gold, that would require the Swiss National Bank to buy 1,500 tons of gold is leading in the polls; and China and India are reporting massive gold consumption.

In the United States the only news about gold is on CNBC about why one shouldn’t buy it.

As we pointed out in the “Importance of Gold to Individuals and Nations”, neither the U.S. government nor its citizens generally are interested in gold. The U.S. Federal Reserve never makes mention of it EVER in their speeches or testimony. Indeed, its only with annoyance that any member of the Federal Reserve will discuss gold, as evidenced in this exchange between former Congressman Ron Paul and Chairman Ben Bernanke.

Ron Paul Asks Ben Bernanke: Is Gold Money?

Having left the Fed, former Chairman Alan Greenspan recently commented that gold will go “measurably higher”.

Here is a brief survey of what is happening with gold around the world:

China and Gold

Shanghai Gold Exchange Volume

The Shanghai gold exchange continues to experience heavy volume with 59.7 tons delivered the week ending October 24, 2014. This follows deliveries of 51.5 tons last week and 68.3 tons the week before. Earlier this year volume was about 25 tons a week.

Shanghai Gold Deliveries 2009-2014

The Shanghai Gold Exchanges is delivering twice as much gold the past few months as it had in the first few months of the year.

Another strong week of gold deliveries at the Shanghai Gold Exchange.

Earlier this year we noted that China had become the largest gold importer and gold producer in the world.

Here is a chart that shows the extent of China’s gold production and imports:

Chinese Gold Production Plus Net Imports 2000-2014

China produces the most gold in the world and imports the most too.

China has become the largest gold importer and producer in the world.

In addition to increasing volume, the Shanghai Gold Exchange is working on offering gold forwards and options.

Chinese gold expert Koos Jansen has noted:

◾ Chinese consumer gold demand in 2013 was 2,200 tonnes, not 1,100 tonnes as the Wold Gold Council states;
◾ Only for consumer demand, China net imported 1,500 tonnes in 2013;
◾ The People’s Bank of China (PBOC) does not purchase gold through the Shanghai Gold Exhange; and
◾ The PBOC is definitely increasing its official gold reserves.

Russia and Gold

As reported earlier this month, Russia, as part of its de-dollarization efforts, stepped up its gold purchases in September to its highest level in fourteen years.

Russian Gold Reserves 1994-2014

Russia makes it's largest monthly purchase of gold in 14 years with 1.2 million ounces

Russia added 1.2 million ounces of gold to its reserves in September, the most in fourteen years.

India and Gold

India is the second largest consumer of gold in the world behind China. It is estimated that Indian households own about a $950 billion in gold! Indeed, India has a national festival, Diwali, during which Indians buy gold.

Last year China surpassed India as the world’s largest consumer of gold. The relegation of India to second place doesn’t reflect a lack of demand for gold in India, but rather the imposition of heavy import duties placed on Indian gold imports the past few years. Imports of gold to India from Switzerland , however, doubled in September to 58 tons up from 27 tons in January.

India does not have major gold mine (although some geologists believe India may have significant gold deposits), so its consumption is dependent upon imports.

Switzerland and Gold

Swiss Refineries Working 24/7 To Supply Gold to the East

As gold flows west to east it stops in Switzerland to be refined. In September, Swiss gross exports of gold were 172.6 tons, the highest amount since February. A good portion of that gold – 58.8 tons was exported to India.

Save our Swiss Gold

Earlier this month, we covered the Save Our Swiss Gold referendum scheduled for a vote on November 30 that would require the Swiss National Bank to repurchase 1500 tons of gold that it sold during the past decade, repatriate any gold it owns outside its borders and to cease selling any of its current gold holdings.

Swiss Gold Reserves 1990-2014

The Swiss National bank has sold 1500 tons of gold since 2000.

If the Save our Swiss Gold referendum passes, the The Swiss National Bank would have to buy about 1,500 tons of gold.

We expect resistance to the Save our Swiss Gold initiative to increase as November 30th draws closer.

United States and Gold

In the United States the interest in gold is in large part limited to bashing it on CNBC.

Miles Franklin’s Andy Hoffman noted: “Per this chart, the U.S. is essentially the only place on Earth where people have purchased less gold since the 2008 crisis, care of history’s most maniacal market manipulation and propaganda campaign.”

In the U.S. gold is wrongly viewed as an investment instead of an asset. Gold has been marketed as a tradeable investment in the United States via ETFs. As the price of gold has declined, so have holdings in gold ETFs.

Gold ETF Holdings 2004- 2014

Gold ETF holdings have fallen with the price

Gold ETF holdings have been falling along with the price of gold.

Sales of American Gold Eagle at the U.S. Mint are down 45% from last year.

American Gold Eagle Sales at the U.S. Mint 2012-2014

American gold eagle sales have fallen the past two years - 2012-2014

American Gold Eagle sales are down 45% in 2014 from 2013.

As we wrote in the “U.S. Department Of The Treasury Warns: Value of Dollar At Risk:

Usually during currency crises gold and silver rise in value as they are considered stable monetary metals. Gold and silver don’t default or threaten to default. They don’t shut down and have no counter party risk. This is why they have been universally accepted as money for 5,000 years.

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All Charts: Nick Laird of Sharelynx – The Gold Standard in Precious Metals Charts

Further Reading:

Gold Supply and Demand

The Smaulgld Gold Buying Guide

The Importance of Gold

Save our Swiss Gold

Save Our Swiss Gold Update

Gold Silver and Real Estate

Russia Adds 1.2 Million Ounces of Gold To Its Reserves in September

The West Sells Paper Gold While the East Buys Physical Gold

Gold Continues to Move From West to East

Gold Reserves By Country – Top 20

Top Foreign Holders of U.S. Treasuries

U.S. Treasury Secretary Warns of Risk of Default

Russia, Ukraine and the Dollar

Are Russia and China Moving Against the Dollar

Gold and Silver Price Manipulation – Suspected

Gold and Silver Price Manipulation – Actual

China Hoards its Gold Production and Ramps up its Imports

Royal Canadian Mint

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