Monday, February 03, 2014

Chinese Gold Rush Heating Up MUX, TNR.v, GDX, GLD, ABX, RGLD, GG


  We have another very important confirmation of the strong demand from China for physical Gold in 2014. With today's move above $1265 Gold needs to clear $1270 for the clean break out and massive short squeeze.

U.S. Mint Gold-Coin Sales Jump 63% in January; Silver Triples TNR.v, MUX, GLD, GDX, SLV

"How January goes, so the year does - we will see whether this year will prove it to be right again, but so far general equity markets are down in January and Gold, Silver and Miners are strongly up for the month. It is very important to see the demand for physical Gold and Silver is picking up not only in China, but in US as well. Similar reports are coming now from Mints all over the world."

Rob McEwen: Will Gold Soar on the Dow Drop? MUX, TNR.v, GDX, GLD, SLV

 "Rob McEwen is in demand now about his views on Gold with equity bubble being challenged last few days. Market manipulations can not be run forever and reality will be settling in at some point. This time can be very close now with Durable Goods report out at  - 4.3% (!) in December vs 2.6% in November. Last Jobs Number disaster can be not so "out of range' now as the bubble Media would like us all to think. Gold is at the very important juncture now and decisive move above $1270 will create the short covering fireworks."

In Gold We Trust:

Chinese Gold Rush Heating Up

In the trading week from January 20 – 24 physical gold withdrawn from the SGE vaults accounted for 57 tons,this is the third week in a row SGE withdrawals have been more than weekly global mine production. In the first 24 days of 2014 withdrawals from the SGE accounted for 216 tons. With one trading week left this month it’s very likely January 2014 will break the all time record of monthly withdrawals, surpassing the 236 tons from April 2013. Is this the height of the Chinese gold rush?

SGE withdrawals 2014 week 4

SGE vs COMEX ™ Jan YTD 2014 

Demand for gold has been strong due to the celebration of the Chinese lunar year, the year of the horse, starting January 31. Across the nation people buy golden gifts for each other, especially by these low prices. It’s quite clear now that the Chinese people will only buy more  physical gold as the price remains low, or will further drop. They are not scared of a loss in value, as it has been in their culture for thousands of years to save in gold as a core asset. The young people, this is taught by the elder. After many years of economic suppression they regained their freedom to do so, being spurred by newly acquired wealth.

Golden Chinese horse

Bloomberg reported on a shopping spree in retail:

“Older people believe gold brings good fortune and keeps its value,” said Jiang, who left in search of another store because the small horse charms she wanted for her nieces and nephews were sold out. “Gold gifts for children teach them about investment from a young age.”

“Lower gold prices give an extra boost to demand,” said Yang Chunyan, an analyst at Orient Securities Co. in Shanghai. “Sales of gold gifts typically accelerate in the two weeks leading up to the lunar new year and have really taken off.”

Meanwhile, in some parts of Asia there is a scramble for safe deposit boxes at banks to store physical gold. According to a source in the mainland, January 7:

HSBC, Bank of China. Dah Sing Bank, Bank of East Asia, Shanghai Commercial Bank, ANZ, Citibank, Hang Seng Bank, NONE have available Safe Deposit boxes – all occupied and there is a waiting list.

Soon after he travelled to Singapore, on January  28 he wrote me:

Same problem with Safe Deposit boxes in Singapore. I opened an account with Standard Chartered Priority Banking today, for boxes they have an 18 month waiting list. I also tried DBS, OCBC, HSBC, Maybank, ANZ and Citibank, no safe deposit boxes available.

Overview Shanghai Gold Exchange data 2014 week 4

- 57 metric tonnes withdrawn in week 4  (20-01-2014/24-01-2014)
- w/w  - 4.67 %, y/y + 39 %
- 216 metric tonnes withdrawn year to date

My research indicates that SGE withdrawals equal total Chinese gold demand. For more information read thisthisthis and this.

This is a screen dump from the Chinese SGE trade report; the second number from the left (本周交割量) is weekly gold withdrawn from the vault, the second number from the right (累计交割量) is the total YTD.

SGE withdrawals week 4 2014

This chart shows SGE gold premiums based on data from the Chinese SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

SGE gold premiums

Below is a screen dump of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

Sge premiums week 4 2014

In Gold We Trust"

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