Tag: gold market

Bank of England stopped gold leasing in 2008?

Data on the Bank of England website suggest that the Bank of England stopped leasing gold in 2008. One of our readers (h/t: @freegolds) sent me this link to the Bank of England website, showing the amount of gold leased or on loan by the Bank of England Banking Department. We have converted the monthly figures from dollars to metric tonnes of gold, using the London Gold Fixings. The following chart shows how the Bank of England has gradually stopped gold leasing activities.

As you can see from the chart below, the gold lending and swapping stopped in June 2008. That was right before the advanced economies were hit by the biggest crisis since the Great Depression. The chart starts in 1999, the year in which a number of central banks signed a joint statement on gold, known as the ‘Central Bank Gold Agreement’ (CBGA) or the ‘Washington Agreement on Gold’ (WAG).

The Bank of England was one of the banks signing the statement back in 1999. In compliance with the Central Bank Gold Agreement, the Bank of England phased out the gold leasing practice.

Update: For some reason, the Bank of England did not participate in the following three agreements, which were signed in 2004, 2009 and 2014.

We would like to hear the thoughts of our readers on this!

The Bank of England stopped gold leasing in 2008, according to a data on their website

14 september 2015
Switzerland already exported 600 tonnes of gold to Asia this year

Asian countries together imported over 600 tonnes of gold in the first six months of this year, according to the latest figures from the Swiss Customs Administration. Despite the fact that gold exports to Asia have come down a little over the last few months, the total year-to-date is still on par with the amounts of gold exported in the first half of last year. A decline in the price of gold and the expectation of rising rates in the US so far didn’t impact gold demand in Asia to the downside.

Asia keeps buying gold

The countries importing the largest volumes of gold from Switzerland in June were India (21.48 tonnes), Hong Kong (15.91 tonnes), China (14.04 tonnes), Iran (12.85 tonnes) and Singapore (6.64 tonnes). With the exception of Iran, these are the countries importing the biggest volumes of gold on a very regular basis.

Looking at the total exports of gold over the first six months of this year, we see India and Hong Kong in the lead with about 210 tonnes of gold imported each. China takes the third position, importing 137,5 tonnes of gold from Switzerland in the first half of this year. Singapore and Saudi-Arabia fill the fourth and fifth position with gold imports of 61 and 28,5 tonnes of gold respectively.

From all the gold Switzerland has exported in the first half of 2015, more than 90% went to emerging Asian economies. All the other countries combined take up the remaining less that 10% of total gold buying from Switzerland. The first graph shows the monthly net gold exports, the second one shows the cumulative volume of the same exports.

Monthly net gold exports from Switzerland

Total net gold exports from Switzerland in first half of 2015

29 juli 2015
Chinese gold imports dropped further in April

Chinese gold imports dropped for the third month in a row in April, according to new data released by the Hong Kong Census and Statistics Department. Net gold imports from Hong Kong amounted to 67,04 tonnes, the lowest volume in more than a year. The volume dropped by 21,2% compared to a month ago and by 11,6% compared to the same month of last year. In april 2013, net imports from Hong Kong were about 10 tonnes higher at approximately 77 tonnes.

A gold trader from Shanghai explained the development to the Economic Times of India: “Banks have adequate stocks from imports earlier in the year, and in some cases, even last year, that they are waiting to dispose of. Any new imports will have to wait until they clear the backlog”.

China imported less gold from Hong Kong in April

China is buying less gold?

The figures from the Hong Kong Census and Statistics Department suggest the demand for the yellow metal in China is waning. The latest report from the World Gold Council on gold demand in the first quarter of 2014 confirm this trend. Sales of bars and coins dropped substantially, as well as the premium on physical gold in China.

However, it would be premature to draw final conclusions based on the gold imports from Hong Kong. While these numbers do cover the bulk of Chinese gold imports, they do not include precious metals being shipped to China directly via Shenzhen or Shanghai. In the near future, China will also start importing gold directly to Beijing. Because we don’t have the numbers on direct imports to these three cities, we cannot provide an overall picture of the Chinese gold imports. The numbers published by the Hong Kong Census and Statistics Department do however give a good estimation, since most of the yellow metal is still imported from Hong Kong.

Record year

Last year, Chinese banks imported a record amount of 1.158,16 tonnes of gold from Hong Kong. A big drop in the gold price enticed the Chinese middle class to rush and buy more. With a more or less stabilizing price, the demand for the precious metal dropped. Year to date, the Chinese gold imports from Hong Kong are 347 tonnes, which is more than the 294 tonnes after the first four months of last year. If the demand for gold picks up later this year, China could surpass the record imports of last year.

28 mei 2014
Gold heading to Asia through Switzerland

Gold export figures from the Swiss Customs Administration show that most of the physical metal is being exported to Asian countries. In the first three months of 2014, most of the yellow metal went to Hong Kong (206,44 tonnes). India came in second with a net import volume of 87,52 tonnes. Direct imports of gold into mainland China take the third place with a volume of 74,9 tonnes in the first quarter of this year.

These figures should come as no surprise, because China and India are by far the largest gold markets nowadays. However, a substantial amount went to Singapore and Saudi-Arabia as well. The total net export from Switzerland to these countries was 40,69 and 15,36 tonnes respectively. The first graph shows the ten countries to which Switzerland net exported the largest volumes of gold.

Most of the gold is exported to Asian countries

Gold heading from West to East
Switzerland is an important hub in the global physical gold market. Many transactions in this market are therefore taking place in this small and mountainous country. If we look to the other side of the balance, we find the usual suspects sending gold to Switzerland. In the first quarter of this year, the United Kingdom was the largest net exporter of the precious metal to Switzerland, bringing in 270,3 tonnes of gold. The second largest supplier of gold to the Suisse vaults was the United States, exporting a net amount of 56,77 tonnes to the European country. Third and fourth place were taken by Turkey and Russia, exporting 39,93 and 25,89 tonnes of the yellow metal to Switzerland.

The US and the UK are supplying most of the gold to Switzerland

(h/t: BMS, Goudstudieforum)

29 april 2014
Gold premiums in India rise to a record 20%

While the goldprice on the world spot market is moving sideways, the price of gold in India is rapidly moving higher. The precious metal is in short supply, causing an upward pressure on the price of gold. To get your hands on some physical gold in India, you have to pay a premium of more than 20% nowadays. That’s twice the import duty of 10% on gold bars. Under normal circumstances the premiums on gold are very close to the import duty, as you can see from the graph below.

In August, the import duty on gold bars was raised from 8% to 10%. But since October gold premiums started to rise rapidly beyond that percentage. The following chart from Chartsrus shows the movement in the Indian gold market.

Gold close to record high in India

The rising premiums and a weak rupee combined drive gold prices in India to record high levels. The yellow line in the graph below represents the gold price on the Indian gold market. Notice the difference between this yellow line and the blue line, which represents the gold price in dollars, converted to rupees. The difference is what we see on the red line in the bottom graph and is the margin Indian buyers pay at the jewelry store or to gold traders.

‘War on Gold’

India is still waging a War on Gold, because gold shows the weakness in the currency. Massive imports of gold result in a substantial current account deficit, putting downward pressure on the value of the Indian rupee. The Indian government and central bank try to discourage people from buying gold by increasing import duties, restricting the maximum import quantities and banning the import of gold coins altogether.

Gold premiums in India rise to a record 20% (Source: Goldchartsrus.com)

19 november 2013
Graph: Quarterly gold demand in the past five years

In the latest quarterly report (PDF) from the World Gold Council we found an interesting table containing the quarterly gold demand figures from the last five years. We have made a graphical representation of these data, so we can clearly see some significant developments in the physical gold market during this interesting period for the gold market.

From this graph we can see the increasing demand for gold coins and bars (red) since Q3 2007. We can also see a huge liquidation of gold holdings from ETF’s (green) from the beginning of this year, which marks the end of a long trend of expanding ETF gold holdings. Last but not least, we see a shift in central bank trading on the gold market. Back in 2007, central banks were still selling a substantial amount of gold, but since 2012 they are net buyers. In fact, last year they bought the largest amount of gold since 1964!

Demand for physical gold in the last five years, click for a full size graph

14 november 2013