Where Is All The Gold Going?
Changing Attitudes
With the help of a set of excellent charts on gold imports vs exports by Nick Laird (www.sharelynx.com), I would like to give you a brief overview of where gold is going. We have heard for some time that gold is moving to the Far East but is it really only moving there?
Roman historian Gaius Plinius Secundus (Pliny the Elder, AD23-AD79) complained that India drained Rome of its gold
Official gold reserves held by central banks – in the official sector, there has certainly been a noticeable shift, with emerging market central banks increasing their buying to such an extent that total central bank holdings have been rising since 2008, for the first time since the mid 1960s – click to enlarge.
Well if we start with the US, it certainly is going out. In the first chart, we can observe that gold has been leaving the US without exception at least since 1996. Even at the top of the gold bull market when the price crossed briefly $1,900, gold exports exceeded gold imports for the US. However, according to Nick Laird, if one adds US gold mine production to this, it puts the US in a net neutral position. So US imports plus production equals exports; this has been the case over the last 18 years.
US gold exports and imports – adding back annual production reduces the difference roughly to zero – click to enlarge.
Is the same the case for Europe? Contrary to what one might think, while gold is moving from West to East, some of it is not going all the way to India and China but rather stays in Europe. I have always made a distinction between North America (US and Canada) and Europe. In the next chart below, it can be seen that European central banks have stopped selling gold in 2008, which corresponds with the financial crisis that almost brought down the international financial system.
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