Gold mid-tiers’ Q3 2024 fundamentals
All-time-high gold prices combined with relatively-contained costs catapulted unit earnings to another epic record.
Just last week we highlighted how India and China are driving global gold demand (Read: India and China Continue to Drive Global Gold Demand) but it appears demand from China is even stronger than we thought.
Statistics released today by the Shanghai Gold Exchange show that China’s gold imports have jumped over 460 percent in just the first ten months of this year. Through October, China’s gold imports totaled 209 tons of gold, up from just 45 tons in 2009.
And they’re not done yet. Historically, the fourth quarter is when China imports the largest amount of gold so we could see much higher figures when all is said and done.
The import figures were released as a part of a presentation from Shanghai Gold Exchange Chairman Shen Xiangrong. Chinese inflation worries have picked up steam as the year has progressed and Shen said “uncertainties in domestic and global economies, and increasing anticipation of inflation [in China], have made gold as a hedging tool very popular” as investors look for a store of value, according to several news reports.
Shen added that 70-80 percent of the imported gold has been transformed into mini gold bars which the Financial Times describes as a “classic product for retail investors.”
While the figures are astounding, we’ve been discussing this developing trend for several years. Since 2000, the gross national income (GNI) per capita on a purchasing power parity basis has jumped nearly 200 percent in China.
Without a social safety net, efficient retirement savings vehicles and a limited number of investment options, these wealthier citizens are turning to the metal that they began using as a currency more than 4,000 years ago.
We believe the figures released today reflect long-term gold demand and are not short-term in nature.
