Editor's Note: This issue of Review & Outlook is based on a series of posts I made at the USAGOLD blog
over the course of the past month. China has imported an unprecedented
amount of gold bullion in 2013. So much so that, if it were to maintain
the current pace, it would import nearly the equivalent of global
production for the year. When the news first filtered out of China on
the amounts of gold being mobilized through its Shanghai Gold Exchange,
the numbers seemed too large to be believed. The obvious question became
"What is the source of this extraordinary amount of gold bullion?" It
was only in October when Reuters reported that much of that gold had
been shipped from London-based exchange traded funds to Switzerland for
refining into smaller Asia-friendly bars and then on to Hong Kong and
Shanghai that the full picture came into focus. It was only then that
the extraordinary numbers gained credibility.
Below I detail how
the China gold trade mechanism works, the reasons for it, and why
China's interest in gold is likely to remain of paramount importance to
the global market for many years to come. I have updated the original
statistics from recently posted reports at the Koos Jansen website
based in the Netherlands -- a research source specializing in the China
gold trade. To stay abreast of the China situation as well as other
developments in the gold market on a daily basis, I invite you to visit
our blog page linked above.
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