Gold demand in China has been relentless in recent years and shows no signs of slowing. Unlike countries in the west, China produces as much as it can and buys every ounce it can get it hands on. When it comes to business and the acquisition of wealth, China is known for taking the long run. When the price of gold suffered after peaking in 2011, it was China buying up many assets throughout the years before gold finally bottomed in the $1,060 an ounce range of December 2015.
China’s state-owned or controlled enterprises were busy buying up many of the world’s gold assets during this period. And, just because China has been buying up assets around the globe, doesn’t mean its neglected exploration in its own country. China is, after all, the world’s largest gold producer.
China Discovers Nation’s Largest Ever Gold Deposit
On Wednesday morning, Zero Hedge reported that,
“Shandong Gold Group, China’s second-biggest gold producer by output, announced on Tuesday that it has discovered deposits in eastern China containing an estimated 380 tons of gold reserves, which would represent the nation’s largest ever gold deposit.”
While the news is from China, and any initial reports, especially with regards to early stage mining projects, should be taken with a grain of salt. Located in the Laizhou-Zhaoyuan region in eastern China’s Shandong, the area is home to China’s largest gold deposits.
Zero Hedge went on,
“According to a Tuesday statement that cited the company on sdchina.com, the Xiling mine in Shandong province told local authorities it had found 382.58 tons of gold reserves and that the volume could reach more than 550 tons once exploration is completed in two years.”
Click here to read the entire Zero Hedge article.
The company taking credit for the discovery is Shandong Gold Group, China’s second-biggest gold producer by output. The deposit has been estimated to contain an approximately 380 tons of gold reserves; equal to greater than double Canada’s total annual output from all mines.
When it comes to mine production, China tops all countries with 455 metric tons. China has now held this position for ten years in a row. With today’s news of the Xiling mine discovery in Shandong province, it will likely hold this position well into the 2020s.
China is the world’s largest gold consumer, and has been for four straight years. China surpassed India back in 2013, when it began consuming upwards of 1,000 tons per year according to the World Gold Council.
Gold Demand Tracker | Hong Kong and China
The Chinese domestic market for gold was historically cloaked in secrecy. In 2016 China had net imports of roughly 1,300 tonnes of gold, down 17% from 2015. Koos Jansen, who writes at Singapore-based BullionStar.com, explained,
“The importance of measuring gold imports into the Chinese domestic gold market – which are prohibited from being exported – is to come to the best understanding on the division of above ground reserves in and outside the Chinese domestic market.”
Jasen goes on to explain,
“According to data by the Hong Kong Census And Statistics Department (HKCSD) the special administrative region net exported 771 tonnes of gold to China in 2016, ranking first once again.”
Click here to read China Net Imported 1,300t Of Gold In 2016.
China, when it comes to business is largely focused on control. It knows if it can surpass the United States with total gold ownership, its seat at the global monetary table will only be that much bigger.
China currently has the fifth largest gold reserves in the world after the United States, Germany, Italy, and France.
In the summer of 2015, China finally revealed it had amassed a hoard of gold totaling more than 1,600 tons. The report represented a 57% jump in reserves since 2009 – the last time China revealed its gold reserves.
As a nation, I don’t expect China to discontinue its endless hunt for new gold assets anytime soon. The Ministry of Industry and Information Technology said last month, which China hopes to increase reserves by 3,000 tons to as much as 14,000 tons by 2020. These holdings would exceed the reserves of the United States. Gold demand in China will not fall due to Shandong Gold Group’s potential discovery of China’s largest ever gold deposit. If anything, China’s appetite will only increase as the fragile monetary system continues to bump along and its people and government look to back their purchasing power with real money.
