Gold is on the Move Between Nations, but with Little Price Reaction

The price of gold is essentially unchanged from where it finished this past year.  There have been several interesting developments.  Of particular note, China, India and Russia had been significant buyers last month. 

It seems that the UK exported gold to Switzerland, where it was refined and then shipped to China and India.  Russia continues to build up gold even as its hard forex reserves fall.

According to official Swiss data, its shipments of gold to The far east almost doubled in 03 from February to Fouthy-six.4 metric tonnes.  Switzerland exports of gold to India doubled to a four-month high of Seventy two.5 mln metric tonnes.  However, Swiss gold exports to Hong Kong fell by about a quarter to 30 mln metric tonnes in March.

Overall, Swiss exports of precious metal, which are not sensitive to the strength of the actual Swiss franc, rose 65% in 03 to 223.3 metric tonnes.  This is the highest in at least two years.  Imports rose 51% to 281.Six metric tonnes, which is a new high since the time sequence began.  Imports from the UK jumped six-fold to 97.2 measurement tonnes.

Russia bought about 31.1 metric tonnes of precious metal in March.  This is about three times more than Russia typically has been buying recently.  However, purchases slowed in The month of january and February.  The buys in March seemed to be the "catch-up" as if Russia gold purchases are on a planned program. 

Russia'utes gold accumulation has more than doubled its holdings because the middle of 2009 and contains tripled them since 2005.   Russia's gold holdings amount to One.2k metric tonnes of gold.  It is the fifth biggest national holding behind the US (8.1k tonnes), Germany (Three.4k tonnes), Italy (2.5k tonnes), France (2.4k tonnes). Russia's gold holdings have risen over the last couple of years, as its overall reserves have fallen. 

Gold makes up about almost 15% of Russia's supplies.  Major industrialized countries possess relatively low levels of supplies relative to trade and funds flows.  Their gold holdings are relatively large.  Official gold holdings account for nearly three-quarters of US reserves.  German official gold holdings are almost 69% of its reserves.  Italian and French holdings are proportionately slightly smaller than Germany's.  China's precious metal holdings may be about 1% of its reserves, which says much more about its large reserves than it does about its precious metal.

Russia appears to hold a 100 tonnes more than China though there tend to be suspicions that China's holdings may be under-reported.  Indeed, the PBOC has not updated its official holdings since 2009.  There is some speculation that it may have more compared to doubled its holdings because its last update.  The cloak of secrecy may go aside if China wants to bolster its case for being included in the SDR.  We have previously made a similar point about the currency percentage of its currency reserves.  The actual IMF will hold meetings next month about the SDR, making its final decision at the begining of Q4.

India holds about 558 metrics lots of monetary gold.  It accounts for about 7% of its reserves.  Additionally, it has an estimated 20.6k metric tonnes of gold within private hands and another 10% much more in Hindu temples.  India's gold imports account for nearly a third of their trade deficit.  The Indian government is wrestling with ways to tap into the large personal sector gold holdings.  The following month it expects to declare new initiatives, such as permitting gold deposits at banking institutions with fixed interest rates, the actual sale of gold bonds and gold coins.

The IMF's data indicate that world's currency reserves were valued at $11.6 trillion at the end of 2014.  The precious metal market is far too small to substitute even a significant part of the paper money.  A couple of years ago, the senior PBOC official acknowledged this by indicating that China could only invest 2% of their foreign exchange holdings in gold because of the size of the precious metal market.  Only Russia, where reserve holdings are slipping appears to be really diversifying away from document money.  This is more politically inspired than economic.  The opportunity cost in the low interest rate globe is marginal.  This will change if/when rates rise.

Notable Developments within Gold is republished with permission from Marc to Market