When I look at these two charts below from Koos Jansen (In Gold We Trust), I’m always amazed with the volume of gold being transferred from the West to the East, after a stop in Switzerland.
You can notice that almost all of the gold imported in Switzerland this year has been quickly exported toward China, via Hong Kong.
After having been transformed from 400-ounce bars with 99.95 purity (Western standard) to 1- kilogram bars with 99.99 purity (Asian standard), the gold is promptly exported from Switzerland to China. The volume of Swiss gold exports to Hong Kong was multiplied five-fold this year.
When one knows that the premiums on gold prices in India are rising because of import restrictions and that the demand for gold in China is still rising, one may wonder, how long will the gold price be determined by the West’s derivatives markets rather than by the physical markets of the East? Also, one must not forget that gold bought by individuals in Asia and by the world central banks is taken off the market for considerable periods of time (10-20 years), which diminishes the available volume for trading.
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Dan Popescu Gold & Silver Analyst / Member of the Goldbroker.com Editorial Team
Mr. Popescu is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system. He has followed regularly since 1970 the gold, silver and foreign exchange markets. He has a bachelor degree in physics (1993) from Concordia University in Montreal, Canada and has completed the Canadian investment management certificate (1999) of the CSI. He is a member and was the president in 2004 of the CSTA and also was president in 2005 of the Montreal CFA Society. He is a member of the CFA Institute, the MTA, NYSSA, UKSIP, the CSTA and the Gold Standard Institute International.