(Reuters) – China has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves.
The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong’s pole position in China’s gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.
China does not release any trade data on gold. The only way bullion markets can get a sense of Chinese purchases is from the monthly release of export data by Hong Kong, which last year supplied $53 billion worth of gold to the mainland.
“We have already started shipping material in directly to Beijing,” said an industry source, who did not want to be named because he was not authorised to speak to the media. The quantities brought in so far are small, as imports via Beijing have only been allowed since the first quarter of this year, sources said.
The People’s Bank of China (PBOC) is believed to be adding to its gold reserves, according to the World Gold Council (WGC), as it looks to diversify from U.S. Treasuries. The central bank rarely reveals the numbers.
Gold’s 28 percent plunge last year and China’s record bullion imports in 2013 sparked speculation that the PBOC has added significant amounts of gold to its reserves, and could likely make an announcement this year.
Central banks tend to be very secretive about their gold purchases and sales because prices are extremely sensitive to their trades. Rumours last year of Cyprus selling its gold reserves to prop up finances sent the metal down more than 10 percent over two days – its biggest such decline in 30 years.
Gold has traditionally been imported from Hong Kong into Shenzhen, where nearly 70 percent of the Chinese gold jewellery business is located. Shanghai was opened up as a second port last year.
Only banks are allowed to import gold into China. Industrial and Commercial Bank of China Ltd, Agricultural Bank of China Ltd, ANZ and HSBC are among the 12 banks that can import gold.
CAUTION ON RESERVES ANNOUNCEMENT
Besides the 1,160 tonnes of gold imported from Hong Kong last year, China had about 428 tonnes of local production. The WGC has said Chinese demand in 2013 was 1,066 tonnes, leaving industry guessing about the “surplus” of around 522 tonnes, not including the amount of direct imports.
The central bank last disclosed its gold reserves in 2009, when it announced that its bullion holdings had risen to 1,054 tonnes from 600 tonnes in 2003.
Full article: China allows gold imports via Beijing, sources say, amid reserves buying talk (Reuters)