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Koos Jansen

Koos Jansen

Koos Jansen is a precious metal analyst from the Netherlands. Koos
mainly provides unique insights about Chinese gold market.

Did The Chinese Know The Price Of Gold Was About To Drop In April?

In April the price of gold made its biggest one-day percentage drop in 30 years, it fell 9% starting a bear trend that hit an intra-day price of $1180 in June. In reaction Asian demand for physical gold since the price drop in April exploded. Shanghai Gold Exchange physical delivery was 117 tons in week 17, dating from 22-4-2013 to 26-4-2013. Read a screen dump from the SGE report published 3-5-2013, it’s the second number from the left (which says 本周交割量 ).

 
One might wonder where 117 tons of gold comes from if physical demand suddenly picks up. One of the supply channels for China mainland is import from Hong Kong (next to mining, scrap and import from other ports). If we look at the these numbers, there is one thing that immediately jumps out.

 

Import didn’t surge in April or in May to supply the mainland’s demand, but it went up in March! China’s net import from Hong Kong was 61 tons in February, in March it broke all records with 130 tons, + 113 % m/m. After this all-time import record, and the vaults of the SGE were sufficiently packed, the price of gold plunged and Chinese investors bought unparalleled amounts of physical gold on the SGE. Did “some” Chinese know what was coming? Did they instigate a price drop in the paper markets? Are the Chinese co-operating (/blackmailing with $ reserves) with western central banks to get to a desired distribution of core money in a lead-up to a new monetary order? Or was it just coincidence? We don’t know, but we’ll find out in coming years.

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