More confirmation last week of critical shifts underway in the gold market. With potential impacts on global demand patterns, and prices.
Reports from Hong Kong show that gold imports here have dropped considerably. With shipments during March falling 24%, to 85.1 tonnes. Down from 112.3 tonnes in February.
That's a big drop. Representing a fourth-month low.
The interesting question is: why?
Analysts attributed the decline to a weaker yuan. Which has made gold less attractive to Chinese buyers of bullion.
But it's interesting that the fall in Hong Kong shipments coincides with another event. The announced opening of official gold imports through Beijing--the first time foreign bullion sales will be allowed directly through the capital.
Up until now, Hong Kong has been the preferred channel for China's gold imports. But authorities are reportedly uneasy about Hong Kong's extensive reporting on trade. Seeking instead to import gold more discreetly, by using Beijing as a "top secret" receiving point.
Speculation is this will allow China's banks to build a big position in physical gold. Without global buyers realizing the accumulation is taking place.
The fall in Hong Kong gold trade jives with such a shift in buying. If Chinese purchasers really are moving to more-secretive sales through Beijing, we may see a permanent decrease in the amount of trade conducted through other cities.
We could thus be witnessing the beginning of a new era in the global gold market. Of course, there's no way to know for sure what's happening with Chinese purchases. But the timing of the shifts in trade is interesting--signalling that this is a space we should be watching.
Here's to going for the gold,
By Dave Forest