This Month in Gold – December 2014

China May Ease Gold Import Rules
Bloomberg – The People’s Bank of China (PBOC) is considering a plan to allow qualified miners and more banks to import gold. The intention is to attract more foreign investors and get China more involved in world markets. Chinese miners would be incentivized to “explore opportunities overseas,” said Wallace Ng, a Shanghai-based metals trader. If the PBOC follows through with the plan, it could drive down the premium on gold for Chinese consumers. In turn, this could expand demand and drive global prices higher.
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US Mint Silver Coin Sales Hit All-Time Annual Record
Bloomberg – Sales of American Silver Eagle coins passed 43.051 million ounces at the beginning of December (and are just over 44 million as of December 30th). That surpasses last year’s all-time record high of 42.7 million ounces. The huge demand forced the mint to temporarily suspend sales in November. The demand is due to silver’s continued price slump in 2014.
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Shanghai Gold Exchange Trades Record Volume of Gold
Bloomberg – The volume of physical bullion contracts at the Shanghai Gold Exchange reached 12,077 metric tons in October, surpassing the 11,614 tons for all of 2013. By the end of the year, this might reach 17,000 tons. The Shanghai Gold Exchange is China’s largest physical bullion bourse and one of the China’s primary strategies for extending its influence on global metals markets. “Asia more generally is becoming more important and there are going to be increasing flows in this direction,” said Wayne Gordon, an UBS Group AG analyst.
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Hong Kong Imports to China Reach 9-Month High
Reuters – November saw the most gold imported to China from Hong Kong since February. Net imports from Hong Kong reached 77.628 metric tons in October, and rose to 99.111 tons in November. A surge in consumer demand due to low prices are responsible for the higher figures. There is also strong demand at the end of the year as Chinese retailers stock-up for the Chinese New Year in January.
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Russia Adds to Gold Reserves for 8th Consecutive Month
Reuters – November marked the eighth month in a row that Russia bought more gold for its reserves. Russia currently has the fifth-largest gold reserves in the world, totaling 1,187.493 metric tons at the end of November. Russia’s central bank had to buy some of the gold from domestic producers, because of Western economic sanctions in response to the Ukraine crisis. Meanwhile, Ukraine had to sell gold reserves as it approaches bankruptcy.
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Industrial Silver Demand Will Grow 27% by 2018
Silver Institute – Compared to 2013 levels, demand for industrial silver will grow 27% by 2018. Half of the 142 million ounce growth will be in the electronics sector. Silver’s conductivity, malleability, ductility, and reflectivity make it indispensable in a wide array of industrial applications. Industrial uses for silver are expanding. Growing consumption in China and India has helped this demand.
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