Gold buying soared in 2013 in China. But who was buying...?
SO WHO's been buying gold in China? asks Adrian Ash at BullionVault. Everyone, says the Financial Times.
"It's not only about increases in official [central bank] holdings. Every level of society, from individuals up to banks, has been allocating more to gold," it quotes Liu Xu, an analyst with Capital Futures in Beijing.
"Wealth is expanding and people have limited investment channels, so gold is attractive."
This isn't the first time the FT spied a gap between Chinese demand and supply data, and pointed to the People's Bank as a "mystery" buyer. But the Pink 'Un is growing more unsure each time...
16 Feb 2012: "China's central bank made significant gold purchases in the final months of 2011..."
18 Dec 2013: "The Chinese state could be behind a surge in bullion imports..."
11 Feb 2014: "Central bank buying is only one of the explanations..."
Our view? BullionVault now has two Chinese language websites (so you can trade bullion in simplified Chinese or using traditional Han as you choose) plus full customer support. But beyond that, we're not privy to Beijing's central-bank strategy. Nor is anyone else writing about China's mystery gold buyer today.
The mystery? Trade group the China Gold Association is the key source for demand and mining figures. And its mining members report output for last year of 428 tonnes. Gold sales as reported through other members' stores and dealerships reached 1,176 tonnes.
"People's Bank?" suggests a leading bank analyst by email.
"Can't be jewelry, as you'd see it in quarterly sales figures."
It can't all be stockpiling by wholesalers either, we add. Because with private Chinese demand so rampant, and the price dropping 30% last year, then buying low would seem a smart move for bullion banks and distributors.
But stockpiling 30% of last year's record-high demand from end-consumers?
This doesn't mean the PBoC is involved. But buying gold low would also look smart for the world's largest foreign currency holder. The People's Bank does hold $1.3 trillion in US Treasury bonds, for instance. That's second-only to the US Fed's $2.2 trillion holdings...and the United States does hold nearly 8 times as much gold as the People's Bank of China as ballast, some 8,133 tonnes of bullion bars.
Or so the official US data tell us. We can't know for sure, and nor can anyone else. All governments are secretive, Communist dictatorships more than most. Unless the PBoC suddenly throws the doors open and 'fesses up to buying gold...something its officials have repeatedly said in the past they're wary of, because it would push prices higher for Chinese consumers thanks to Western speculators piling in...all we can do is guess.
At least we hope ours is an educated shrug. Beware charlatans telling you the rapture of Chinese central-bank gold hoarding is here, once more.
Prices are higher yet again today, by the way.