Perhaps it went out for some dim sum. TTFN, but be right back!
Roughly 21 tonnes, or 685,652 troy ounces of gold in .999 fine kilo bars, was withdrawn, net of a small deposit of 27,328 ounces, from the Brinks warehouse in Hong Kong yesterday.
To put that into some perspective, that is the same amount of all gold in the entire JPM warehouse in the US.
Now compared to the Comex US, in which very little gold bullion actually changes hands or goes anywhere, that is a huge number. But Hong Kong is typically seeing large inflows and outflows of gold. Because that is how the precious metals market has been manifesting in Asia since about 2007: not with endless chains of paper just changing hands in a grand game of liar’s poker, but with the physical exchange of bullion.
And most of that bullion leaves the warehouse and does not come right back, as Koos Jansen has explained repeatedly about the operations on the Shanghai Gold Exchange. It is being accumulated on the mainland, and this probably does not include the PBOC official purchases.
The point of this is that the price discovery in New York is becoming increasingly distinct from the actual physical supply and demand flows of bullion which are taking place in Asia. As I have said, gold is ‘trading like a modern currency’ without respect to its nature as a commodity bound by physical supply. The Fed et al. can print money, but they cannot print bullion. That is the point of it.
