Koos Jansen
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Koos Jansen
Posted on 20 Nov 2014 by

Switzerland Net Exports 100t Of Gold In October

From looking at rising SGE withdrawals and Indian import in recent months, we knew demand was increasing consistently and huge amounts of physical gold had to be supplied from somewhere. As I’ve written in a previous post, this type of gold demand can’t be met by just mine supply and so the metal has to be sourced from countries that have large stockpiles, the usual suspects: the UK, Hong Kong and Switzerland.

In 2013 the UK was severely drained (net 1424 tonnes), last week we learned Hong Kong became a net exporter since August 2014, the latest trade data from Switzerland shows the Swiss net exported 100 tonnes of fine gold in October. 75 tonnes net to India and 45 tonnes net to China.

Switzerland gold trade October 2014

Customs data of the usual suspects (Switzerland, the UK and Hong Kong) is getting exciting; they can’t net export gold forever. We know there are often shortages in these trading hubs, it’s only the price of gold that tells us otherwise. The Financial Times reported there are currently shortages in London, from November 14:

As one refiner told me: “Over the past four weeks my cost of hedging has risen by 30 per cent. Not only that, but there is not enough liquidity in the physical market in London to settle my obligations as they come due. I have to fly gold from Zurich to London, because there just is not enough gold on offer in London. You never used to have to do that.”

Personally, I’ve heard statements, second hand, from a Swiss refiner that supply is extremely tight at the moment. Record lows in the GOFO rate suggest the same dynamics. Meanwhile demand in India and China is rising.

Shanghai Gold Exchange withdrawals 2014 week 45, dips

Even the World Gold Council is reporting on strong Chinese gold demand.

 

Koos Jansen
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  • rowingboat

    It’s easy to see the seeds of the next bull market being sown. When western investors stop selling into weakness and start buying strength again, China India and Westerners will be pulling in the same direction… 2011-12 again but this time with much higher imports into China. It will be amusing to read how the mainstream narrative changes to explain it.

    BTW, I noticed your tweet today about London supplying 40% of India’s silver imports this year. How much silver did the UK import on behalf of investors from 2001-12? This data ought to be common knowledge, but sadly…

  • northern vigor

    Maybe western investors are like my wife…She’s not talking to me right now since she found all the receipts for our actual bullion purchases this year.
    She wanted a new bathroom…When things crash, most people will be crapping out on the streets.

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