Physical Gold Demand Continues to Grow

Physical Gold Demand Continues to Grow by Rory – The Daily Coin

The importance of the Belt and Road Initiative becomes clearer every day. With “ISIS” showing up in countries like India and the Philippines, it seems the need to cause problems outside the middle East and, more specifically, Syria has the CIA deploying mercenaries in other operations.

The 60 nation behemoth unleashed by China, will connect Asia, Russia, China, North Africa and Southern Europe by land and sea. It is a bold project and a vision for the future of the “heartland“.

The Eastern nations, like China, India, Asia and most of the Middle East. not only understand gold and the need for gold, it is not uncommon for the people to hold all of their wealth in gold. Gold has been part of their heritage for hundreds, if not thousands, of years.

The Belt and Road Initiative (BRI) has already discussed gold as payment along the route.

As Koos Jansen reported in March 2016

A group led by Kairat Kelimbetov, the Chairman of the Board of Directors of the Kazakhstan International Financial Center, visited the Exchange

At noon on 26 February 2016 a group led by Kairat Kelimbetov, President of the Astana International Financial Center and former President of the National Bank of Kazakhstan, visited the Shanghai Gold Exchange and held talks with President Jiao Jinpu. Both parties reached consensus on strengthening cooperation and seeking development in the gold market under the “One Belt One Road” project. Zuo Qihan, Kazakhstan consulate general in Shanghai, Shen Gang, Vice General Manager of the Exchange and Zhuang Xiao, CTO, attended the meeting. Source translated exclusively for Bullion Star

Although the article lacks any detail, we can discover its potential impact if we study the financial and political backdrop. Kelimbetov has an impressive track record. Previously he served as the Minister of the National Economy, Deputy Prime Minister and Governor of the National Bank of Kazakhstan. Currently, he’s the head of the brand new Astana International Financial Center (AIFC) that was officially launched in January 2016, aimed to become one of the top 10 financial centers in Asia and one of the top 30 financial centers in the world by 2020. The government of Kazakhstan contributes full support to the AIFC . Source

Most people familiar with the gold story already know most of what has just been said. Now we can fully show why countries around the region have been importing gold like there’s a finite amount of the stuff!!

Turkey, for example, experienced an 8-fold increase in July 2017 of their gold imports, with an elevated pace continuing into August. Turkey should post the largest amount of gold ever imported in 2017. India is on record setting pace as well.

We also know that Kazakhstan has been adding tons of gold their gold holdings and has been steadily increasing their official gold holdings for the past several years. Kazakhstan is an important piece to the puzzle as they are a member of the SCO, EEU, BRI and AIIB. Kazakhstan is plugged in to the unfolding paradigm shift. They also smelt a lot gold, and rare earths for Russia.

As you can see Kazakhstan has been dollar-cost-averaging their stock for the past two years.

Click chart to enlarge – chart courtesy tradingeconomics.com

The chart above shows gold acquisitions being steady after a nice jump in late 2014. Kazakhstan has added, consistently, approximately 7 tons per quarter between 3rd Quarter 2015 and December 2015. The amount increased to 10 tons per quarter beginning in January 2016 and appears to continue through the first quarter 2017.

The chart above, measured in Federal Reserve Notes, shows Kazakhstan has continued adding, very consistently around 3.4 tons per month, to their gold reserves through June 2017.

These smaller nation states that make-up the “heartland” are the nations that both China and Russia are assisting in their development. As these nations continue growing, economically, the better the region does as a whole means both Russia and China grow stronger. Proving what I said in March 2015 that the East conducts business and the West conducts war is an important part of the overall strategy of these powerhouse nations.

If we look at another of the smaller gold markets that is not only beginning to ramp up imports for the citizens they are changing policies in order to bring their gold holdings in line with the unfolding paradigm shift.

Vietnam is one of those nation states. This market, which we get occasional updates from Brimelow’s Gold Jottings, has been increasing their gold imports as much as any of the other nations listed above. They are starting from a smaller “stack” but what is important is the fact they are continually adding to the  official gold holdings and the citizens are increasing their gold holdings as well.

In June 2017 the Asia Pacific Precious Metals Conference, held in Singapore, released a report specific to Vietnam golds markets and policies. As you can see in 2017 it appears there is new found appreciation for the Vietnam gold market and recognizing approximately 7.5 ton monthly demand for physical gold.

GOLD MARKET OVERVIEW

  • 20 Millions of SJC gold bars produced and in circulation.
  • 500-700 tonnes of gold bars are hoarded by the public.
  • 2007-2016 : 836 tonnes of gold in cumulative demand.
  • Average consumption : 898 Kgs/ Million of inhabitants.

GOLD MANAGEMENT POLICY

  • Before 2001, Gold market was highly regulated.
  • 2001 : Market’s gradual liberalization by Decree 174.
  • 2002-2003 : Physical gold imports authorized with greatly reduced taxes.
  • 2005-2007 : Authorization of gold margin trading.
  • 2009 : Tightening of gold policy because of high foreign trade deficit.
  • 2012 : Market’s activities restricted by Decree 24. State’s monopoly on gold bars’ production and official imports.
  • 2017 : New policy on loosening up conditions on gold bar retail sales and financing loans from commercial banks.

MARKET POTENTIALS

  • Strong physical demand at 85 tonnes per annum.
  • Potential Gold Mobilization Plan of 500 tonnes minimum
  • Future VN Gold Exchange with large trading potentials ( Daily margin trading volume of 2 Millions ounces in 2008 )

As these policies begin to be realized what impact will this actually have on the Vietnam market? Who’s to say the demand won’t be double or half? It appears that Vietnam is actually coming full circle from total and absolute control of the gold market to, not necessarily encouraging gold ownership, but not exactly discouraging it either. If gold bar retail sales are legalized and financing loans, I presume using gold, the potential of this change could have a huge impact on the Vietnam gold market. This is definitely a situation to watch over the next year or so.

This further demonstrates how nations are changing their stance on gold. As Alasdair Macleod recently explained Russia is just short of being forced to begin allowing their citizens to own and hold physical gold, if not outright encouraging their citizens to own and hold physical gold. As more and more nations come to their senses regarding gold, more and more people will be liberated from the chains of monetary enslavement. We are finally beginning to see these changes on a broader scale. Once Russia falls, which they must in order to accommodate the BRI, SCO and other alliances that are being set up to be tied to gold, then the world will see gold in a completely different light. Who knows, maybe even Ray Dalio will actually encourage people to hold physical gold instead of paper illusions of gold.

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The Daily Coin

Rory Hall, The Daily Coin. Beginning in 1987 Rory has written over 1,000 articles and produced more than 300 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Silver Doctors, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Don't forget to visit The Daily Coin and Shadow of Truth YouTube channels to enjoy original videos and some of the best economic, precious metals, geopolitical and preparedness news from around the world.