China Curbs Private Gold Imports As It Adds 10 More Tons To Its Own Hoard

China Curbs Private Gold Imports As It Adds 10 More Tons To Its Own Hoard from ZeroHedge

China continues to escalate its capital controls with headlines today from Reuters that Chinese authorities have curbed private gold imports since May as the trade war escalated in a move that could be aimed at curbing outflows of dollars and bolstering its yuan.

According to sources, China’s gold imports are down 300-500 tonnes, with around $15-$25 billion, since May.

As Reuters details, the bulk of China’s imports – from places such as Switzerland, Australia and South Africa and usually paid for in dollars – are conducted by a group of local and international banks given monthly import quotas by the Chinese central bank. But quotas have been curtailed or not granted at all for several months, seven sources in the bullion industry in London, Hong Kong, Singapore and China said.

“There are virtually no import quotas now issued in China,” one source said.

In June and July “next to nothing” was imported by banks, they said.

It’s “unprecedented,” said an industry source in Asia.

“Gold going in is money going out,” said one of the people, adding that Chinese buyers tend buy dollars to pay for metal.

“It’s all linked to what’s going on in terms of how the central bank is handling the currency,” the person said.

Rather notably, after optically pegging the yuan to gold for the last few years, it appears the gold import curbs started as China lost control of its currency…

Source: Bloomberg

China has also restricted gold import quotas before – most recently in 2016 after the yuan weakened sharply, bullion bankers said.

This could not be more ironic  as SchiffGold.com reports, China bought gold for the eighth straight month in July, adding another 10 tons to its rapidly growing hoard.

The recent purchases boosted the People’s Bank of China’s gold reserves to 62.26 million ounces – about 1,945 tons.  China has added about 94 tons of gold to its stash over the past eight months.

Source: Bloomberg

The Chinese continue to add gold to their reserves in an effort to reduce their exposure to the dollar. As one analyst told Bloomberg, “It is important for the country to diversify away from the US dollar. Over the long run, even relatively small-scale gold purchases add up and help to meet this objective.”

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