China's September gold purchases leap sixfoldhttps://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=140824&sn=Detail&pid=92730
GOLD NEWS
China's September gold purchases leap sixfold
The spotlightis on the world's second largest gold consumer, China, with its recordpurchase of gold via Hong Kong and imminent policy changes to revitaliseits gold sector.
Author: Shivom Seth
Posted:Thursday,01 Dec 2011
MUMBAI - -
The regulations passed by the Chinese authorities toencourage gold trading over the past year appear to be working.
Goldpurchases in China via Hong Kong hit a record 56.9 tonnes in the monthof September, registering a six fold increase year on year.
Data from the Hong Kong government showed that the Chinese mainlandimported about 140 tonnes of gold via Hong Kong in the July to Septemberquarter, more than the roughly 120 tonnes for the whole of 2010.
Cheng Bing Hai, president of the Shanghai Gold and Jewellery TradeAssociation, has also been quoted by newswires as saying that totaljewellery sales by the top three jewellers in Shanghai have alreadyexceeded 100 tonnes so far this year.
According to available data, imports of gold and specie in September2010 was HK$ 4317.3 million, while in September 2011, it was HK$ 19,500million. Similar data from the external merchandise trade and trade ingold and specie showed that between January to September 2010, importswere HK$ 47629.9 million as compared to HK$ 102,808.1 million in theJanuary to September 2011 period.
Domestic exports on the other hand were way lower. According to theCensus and Statistics Department of the Hong Kong government, exportswere HK$ 1814.4 million in September 2010 as compared to HK$ 8331.2million (359.2%) in September 2011. Similarly, domestic exports betweenJanuary to September 2010 were HK$ 34779.4 million as compared to HK$41298.7 million (18.7%) in the corresponding period of this year.
China has been encouraging its citizens to buy and hold physicalgold, either in the form of jewellery, coins or bars. The Asian countryalso had widened the number of banks allowed to import gold and has beenencouraging more gold investment through new exchanges and yuandenominated products. On June 28, China opened its first precious metalsspot exchange.
POLICY DECISIONS
Reports indicate China's aggressive promotion has pushed Chineseconsumer demand for gold up 25% overall this year - much higher than the7% global average. This is a far cry from the position in 2002, beforewhich Chinese citizens were barred from owning physical gold underpenalty of imprisonment.
That policy was dropped and the Shanghai Gold Exchange came intobeing. In mid October, a new Renminbi kilobar gold was launched, theworld's first offshore yuan denominated spot gold contract. It startedtrading on Hong Kong's Chinese Gold and Silver Exchange.
Taking this a step further, the Ministry of Industry and InformationTechnology in China has plans to reform the gold sector in China byeliminating smaller gold smelters. The Ministry also has said it willsupport international gold prices in the long run. At a national goldindustry meeting on November 28, the Ministry said it planned to shutdown certain gold producers with smaller ore processing capacities.
In a major turnaround and for some time now, the government also hasbeen airing news programmes on state owned television urging consumersto buy and sell gold and silver. Moreover, analysts say when Chinaexpressed its interest in purchasing $80 billion in gold (about 2600tonnes), it profoundly altered the gold market's long standing synergy.
Analysts have said the country also has mounted an aggressive defenseof its domestic gold mining industry. Its country's rising middle classand growing affluence will ensure that China's gold jewellery marketnearly doubles to 955.2 tonnes by 2020, as compared with 519.6 tonnes in2011, analysts added.
iPad Version: REUTERS/Claro Cortes
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