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Could China be trying to keep its gold imports completely out of the public eye?

by , 26 May 2014

It's no secret that the price of gold has struggled over the past few years. Despite staging a half decent rally at the start of the year, gold is now wallowing around $1,280. It's well publicised that China mopped up a lot of gold last year. But this year, the pattern is looking at bit different. Why is this? Let's take a closer look at what's going on…

Imports into China from Hong Kong have plunged

China has imported much of its gold via Hong Kong. But over the past few months, imports have fallen heavily.

In March, gold imports fell 24% from February, the team of experts at The Crux explain. From 112.3 tonnes to 85.1 tonnes. That’s a large fall. That’s a fourth month low.

What’s going on with China’s gold imports?

Many analysts in the gold market put it down to the weaker Chinese currency. With the yuan being weaker, gold isn’t as affordable to China’s gold buyers.

But the sceptics out there have noticed that this coincides with another development in China.

China announced that it’s now allowing gold imports into Beijing. This is the first time that gold from abroad will come in through the Chinese capital.

Until Beijing, Hong Kong was the preferred route for imports of gold. But rumour has it that authorities didn’t appreciate Hong Kong’s reporting of the movement of gold.

So to deal with this, China can now import gold through Beijing. This is perfect if China wants to keep its gold imports confidential. China doesn’t publish gold figures.

By doing it this way, Chinese banks can discretely build on their holdings of gold. And all without the rest of the world being any the wiser.

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Time will tell what’s going on with China and gold

If the recent fall in imports in Hong Kong persist, then perhaps China is importing the chunk of its gold purchases through Beijing. If this is the case, then chances are you’ll see the volume of trade drop permanently at other cities.

It’s certainly an interesting development.

So there you have it, why China could be trying to keep its gold imports completely out of the public eye.

Could China be trying to keep its gold imports completely out of the public eye?
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