gold

The rise in the stock market is creating a lot of wealth for Chinese investors, and they are celebrating by buying gold jewellery. The first issue of the Apple gold watch sold out in less than an hour in Chinese stores!
Over the next two to three years, Apple will likely need substantial amounts of gold to meet the massive demand for its gold watches. Each watch is made with about two ounces of gold.
Below is a daily chart for ZiJin Mining, the largest gold mining company in China. I own the stock, and I’m an eager buyer of much more stock, on every 25 cent decline in the price.
This great company is clearly poised to be a leader in the gold jewellery oriented “bull era”.

Gold Fix ChartThe rapid 25% drop in the gold price during the April-June period of 2013 sparked a leap in gold demand that we have heard described as a once in a generation’ event. -World Gold Council

If central banks suppress the price of gold, this can only be done if physical gold is supplied to the market.
So the question is, who is currently selling gold to China?

china gold

“If the RMB wants to achieve international status, it must have popular acceptance and a stable value. To this end, other than having assurance from the issuing nation, it is very important to have enough gold as the foundation, raising the ‘gold content’ of the RMB. Therefore, to China, the meaning and mission of gold is to support the RMB to become an internationally accepted currency and make China an economic powerhouse. That is why, in order for gold to fulfill its destined mission, we must raise our gold holdings a great deal, and do so with a solid plan.   Step one should take us to the 4,000 tonnes mark, more than Germany and become number two in the world, next, we should increase step by step towards 8,500 tonnes, more than the US.
- Song Xin, Party Secretary and President of the China Gold Association

SGE bar small hi-resThe current structure of the Chinese market with the Shanghai Gold Exchange (SGE), launched in 2002, at its core has been designed by China’s central bank, the People’s Bank Of China (PBOC),
(i) to manage the amount of gold added to Chinese (non-government) reserves,
(ii) to grant all gold added to Chinese (non-government) reserves and traded in the Chinese wholesale market to be of the highest quality,
(ii) to provide the Chinese people direct acces to the wholesale market.

Sprouted from the centrally minded Chinese authorities, the SGE system was implemented to stimulate the citizenry to buy physical gold and to develop the Chinese gold market in order to support the internationalization of the renminbi:

Koos Jansen

Kindly note the pattern

There is a story being told to the masses about Chinese gold demand that is grossly incorrect.
The huge discrepancy between numbers from the World Gold Council (WGC) and actual gold demand is so wide yet cunningly hidden I must conclude there is essential information about physical gold demand deliberately kept privy.
Let’s go back to April 2013:

The eventual financial “reset” will involve China rolling out a gold-backed currency.
As the world’s largest importer/exporter, China would be in position to dictate a requirement that countries trading with China would be required to use China’s new currency for trade settlement.
This would establish China’s gold-backed yuan as the de facto global reserve currency.

Any country which issues a currency not backed by gold would see the value of its currency plummet.
On the assumption that China would require a full audit of any country converting its currency into the new yuan, the U.S. would be forced to open the Fed’s gold vault for Chinese inspection.
I think we all know how this exercise will end…

china gold

If the price of gold is determined by physical supply and demand of gold we are supposed to believe that since April 2013 (see chart below) there has been far more supply than demand as the price has come down substantially.
Supposedly there has been so much supply, that Swiss refiners expanded their plants and worked in three shifts 24 hours a day to refine all this gold, which they fortunately could dump in China!
The decline in the price was an enormous flood of supply and feeble demand!

China dragon

I would like to point out that the Chinese traders have been absent from gold/silver trading as this is their New Year.  They will be back Wednesday.
No doubt that due to their absence our bankers are having an easy time of knocking our metals down….which I expect will end on Wednesday.