Gold no slam-dunk sell in China as aunties pounce

Imports Surge

Net gold imports to China via Hong Kong more than doubled to 826 tons in the first nine months of the year, according to data from the Hong Kong Census and Statistics Department. Global gold ETP holdings tumbled 29% this year, reaching the lowest since 2010 last week, while more than $64 billion was wiped from the assets, data compiled by Bloomberg show.

China may allow more companies to import and export gold next year as it seeks to open its financial markets, according to draft rules released by the central bank on Sept. 30. It’s considering allowing foreign financial institutions and companies that produce more than 10 tons of gold a year to import and export.

“We can’t sell gold now in China produced in our overseas mines,” said Lan Fusheng, vice chairman at Zijin Mining Group Co., China’s largest gold miner by market value. “We would definitely welcome this change.”

The company has projects in Tajikistan and Australia and produces 6 tons to 7 tons outside of China annually, Lan said.

Government Reserves

The People’s Bank of China, which imports gold for foreign- exchange reserves, hasn’t given an update on its holdings since April 2009, when they stood at 1,054 tons. China’s government may have accumulated about 300 tons of gold to diversify the state reserves during the first six months of the year, said Philip Klapwijk, the founder of Precious Metals Insights Ltd., who spent 25 years monitoring the market.

Central banks added almost 535 tons to reserves last year, the most since 1964, and may buy a further 350 tons this year, the WGC estimates.

Russia raised bullion reserves about 57.4 tons this year, while Kazakhstan added 20.3 tons and South Korea’s climbed by 20 tons, according to Bloomberg calculations based on International Monetary Fund data.

In Shanghai, China’s center for gold trading, Malca-Amit Global Ltd. said it opened a vault this month big enough to store 2,000 tons of the metal, as well as diamonds and jewelry. The company’s Hong Kong facility, which can hold 1,000 tons, opened in September.

“I don’t want to put my money in a bank,” said Yang, the auntie from Anhui. “I want to keep up with my relatives and friends back home. We all like to compete to see whose necklace is thicker.”

www.bloomberg.com

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