Was China's central bank Buying Gold?...
Recorded 17 February 2012
Transcript from 17 February 2012, written by Ben Traynor
The Gold Price ended this week more or less where it began it. Friday's PM London Fix price was $1723 an ounce, a 0.7% gain on last Friday's.
Silver was also flat on the week, coming in at $33.48 at Friday's fix, a change of just seven cents from a week earlier.
The World Gold Council published its latest Gold Demand Trends on Thursday, showing global gold consumption data for the fourth quarter of last year. India, traditionally the world's largest gold consumer, recorded lower gold demand than China.
However, this does not in itself mean that China has taken India's crown as the world's largest gold buyer. China's Q4 gold demand was only 2% higher than a year earlier. India's meantime wad down 42%, partly as a result of the Rupee falling to record lows against the Dollar. Over 2011 as a whole, Indian gold demand still comfortably outstripped China's.
The Financial Times carried a story on Friday suggesting that China's central bank made "significant gold purchases" in the last three months of 2011. The FT cites a discrepancy between the volume of gold imported and mined and the demand volume reported by the World Gold Council on Thursday.
There could however be alternative explanations for the gap. For example, bullion banks and dealers could simply have been stockpiling ahead of January's Lunar New Year, which in 2012 fell particularly early. Although January saw reports of heavy retail gold buying, Asian wholesale dealers were reporting weak flows and falling premiums. This could mean that gold imported towards the end of last year was then used to satisfy retail demand last month, rather than ending up in the central bank's vaults.
Paulson and Co, the hedge fund run by long-term gold bull John Paulson, sold 15% of its position in the world's largest Gold ETF last quarter, most likely to meet client redemptions. 13-F filings reported to the Securities and Exchange Commission this week also show that two other large funds sold GLD positions. The Soros Fund meantime, which sold most of its GLD position last year, bought some shares in the ETF last quarter.
US markets are closed on Monday for President's Day. Monday also sees the Eurozone finance ministers meeting postponed from earlier this week, where they will discuss the second Greek bailout.