By Glensys Sim and Feiwen Rong, 1/11/12
China’s gold imports from Hong Kong surged to a record as consumers bought the metal
before the Lunar New Year this month and investors sought to hedge against financial
turmoil. Bullion rallied to a four-week high.
Mainland China bought 102,779 kilograms from Hong Kong in November, up from 86,299
kilograms in October, according to the Census and Statistics Department of the Hong
Kong government. China doesn’t publish gold trade data.
Demand for gold is climbing in China as investors seek to protect their wealth against
slumping property prices and equity markets amid an inflation rate above 4 percent.
The nation overtook India in the third quarter as the largest gold jewelry market,
according to the World Gold Council. The country is also the biggest producer. Bullion
rose as much as 0.9 percent to $1,647.45 an ounce today, the highest since Dec.
"China's appetite for gold is very strong and growing,” said Tao Jinfeng, chief
investment consultant at Haitong Futures Co., China’s largest brokerage by registered
capital. “The few months before the Lunar New Year is typically the peak demand
period for Chinese people.” The weeklong holiday begins Jan. 23.
Imports were profitable as prices in Hong Kong mostly traded at a discount to those
in China in November. Gold for immediate delivery of 99.99 percent purity on the
Shanghai Gold Exchange averaged 356.05 yuan a gram ($1,753 an ounce) in November,
compared with an average of 434.68 Hong Kong dollars (353 yuan) at the Chinese Gold
& Silver Exchange Society.
“There is always the possibility that some purchases were made by the central bank,”
said Tao, rated the fourth-best China gold analyst in a Futures Daily and Securities
The People’s Bank of China last made known its gold reserves more than two years
ago, announcing that it held 33.89 million ounces, or 1,054 tons, as of June 30,
2009. Officials at the central bank weren’t immediately available to comment.
China’s holdings are the world’s fifth-largest by country, according to World Gold
Council data. Central banks and government institutions bought 142 tons in 2010,
International Monetary Fund data show.
As incomes rise, Chinese investors are looking for alternative investments as the
Shanghai Composite Index tumbled 33 percent since 2009, making it the worst performer
among the world’s 15 biggest markets, while home prices fell for a fourth month
in December after curbs that included higher down-payment and mortgage requirements.
Per-capita disposable income for households in towns and cities rose 14 percent
to 16,301 yuan in the first three quarters of 2011.
Gold climbed 10 percent last year, rallying for an 11th year, as central banks joined
investors in buying bullion to diversify assets. South Korea, Thailand, Turkey,
and Russia were among those who added gold to reserves in 2011.
Bullion for immediate-delivery in London, which reached a record $1,921.15 an ounce
on Sept. 6, traded at $1,645.25 an ounce by 5:32 p.m. Singapore time today.
Take advantage of Gainesville Coins' offer on the
2012 Silver Eagle monster boxat as low as $2.49 over spot. For gold
bullion buyers, take advantage of the
2012 1oz American Gold Eagle at as low as $69.00 over spot.