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From West to East: Asia Gobbling Up Gold as US Exports Surge

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Gold exports from the US nearly doubled in the first two months of 2017 compared to last year. Where is all of this gold going? Most of it is heading east.

Total US gold exports in the first two months of 2017 totaled 101 tons. That compares with 56.5 metric tons in 2016. Nearly two-thirds of the gold flowing out of the US ended up in Asia. China and Hong Kong imported 51 tons of US gold, and India gobbled up another 10.8 tons. Switzerland was the leading non-Asian purchaser of US gold, importing 28 tons. England imported 5.6 tons of US gold, and the UAE took in 3.3 tons. The remaining US gold exports went to countries such as Germany, Canada, and Mexico.

To put things into perspective, gold exports to China, Hong Kong, and India doubled in the first two months of 2017 compared to the same period the previous year.

All of the gold flowing out of the US is helping feed a growing Asian appetite for gold. The yellow metal has steadily migrated from the West to the East over the last few years, with China becoming a more and more dominant player in the world gold market. As we reported last week, gold consumption shot up in China during the first quarter of 2017, rising a healthy 14.73%. Chinese investors are buying gold bars at a torrid rate. The country’s appetite  helped drive global demand for physical gold up 9% in the first quarter of 2016.

Meanwhile, Indians bought more 23 tons of gold in a single day during the Akshay Tritiya festival. According to a report on livemint.com quoting an unnamed source familiar with provisional data from the finance ministry, India’s gold imports quadrupled in April, jumping from 22.2 tons to 98.3 tons year-on-year.

Meanwhile, the US is running a gold deficit. Mine output and imports of gold into the US in January and February totaled just 80 tons. In other words, the US gold market faced a deficit of 21 tons through the first two months of this year. As analyst Steve St. Angelo put it, “someone had to liquidate an additional 21 tons of gold from their vaults to export to the East…where they still understand the vital role of gold as real money.”

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