NEW YORK: China has huge underestimated supplies of gold supply and for several years now, China’s actual annual gold production, consumption, and imports have been running considerably higher than the data revealed in official and semi-official statistics, according to Jeff Nichols, Managing Director of American Precious Metals Advisors.
Jeff Nichols in an article in his site http://nicholsongold.com points out the reasons why gold supplies may be under-reported in China:
-The China Gold Association (CGA) numbers reflect production by their members only — but omit gold mined by non-members. These include many small, often rudimentary, unofficial mining operations some of which are illegal existing in the “underground economy,” no pun intended.
The CGA data also excludes production from mines owned and operated by the military, which is significant according to my sources. And not to be overlooked is by-product output from the country’s copper, silver, and other metal-mining activities. Again, this is significant though hard to know just how significant.
-Also missing from the CGA reports are the huge quantities of gold contained in copper and other precious-metals bearing concentrates imported and processed by Chinese smelters and refiners.
-In addition to these unreported sources of supply, analysts and commentators seem to forget about secondary supply — that is from recycling of jewelry, investment bars, and industrial scrap. Just to get an “order-of-magnitude” possibility, in recent years global secondary supply from scrap recycling has contributed more than one-third of total world supply. If scrap contributed only five or ten percent of China’s total gold supply it would still be quite important.
-Western analysts estimate China’s total gold imports last year were around 490 tons — but there is little mention of “illegal” imports — that is gold smuggled into China. We know smuggling is quite significant in some countries — Vietnam and India, for example. We can only imagine how many tons of gold in the form of tael bars, wafers, coins, investment-grade jewelry, etc. is carried into China each year by travelers and professional smugglers.
