The Declining Trade Deficit: Not As Rosy As You Would Think

The trade deficit numbers are out for June 2013 and have been very positive. Due to an oil boom, the trade deficit shrank 22% from around $44 billion in January 2013 to $34 billion in June 2013.

As you can see on Chart 1, the decrease in deficit was due to an increase in exports (red chart) and a decrease in imports (blue chart). This looks very promising, but I want to show that not all is well if you look into the details.

Chart 1: Import Vs. Export

Let's look deeper into these import and export numbers. Chart 2 gives the breakdown of the export numbers. The largest segments are "machinery and transport equipment", "chemicals and related products" "mineral fuels and lubricants" and "re-exports".

Chart 2: Exports January 2013

Chart 3 gives the breakdown of the import numbers. The largest segments are 'machinery and transport equipment", "mineral fuels and lubricants", "miscellaneous manufactured articles".

Chart 3: Imports January 2013

From these numbers we can deduct that the oil industry is indeed a very important segment that will influence the import and export numbers.

If we then further look at how these numbers evolve in time from January 2013 till June 2013 we have charts 4 and 5.

Chart 4: Exports (billion USD)

Chart 5: Imports (billion USD)

When analyzing the trends on charts 4 and 5, there is one segment that is worth noting. We see that exports of petroleum products (which are incorporated in the segment "mineral fuels and lubricants") have been going up, while imports of the same have been going down. The reason for this can be found in the divergence of West Texas Intermediate (WTI) crude oil and Brent crude oil.

To continue reading this analysis: go here.

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China Gold Imports from Hong Kong in April 2013: Disappointing

The China Gold Imports from Hong Kong in April 2013 came in lower than expected, but still very high. I had hoped for a higher number with the decline in gold price...

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China Gold Imports from H.K.

This page is created to monitor China Gold Imports from Hong Kong.

I'm monitoring the gross imports, net imports from Hong Kong to China.
I'm also monitoring the ratio between net imports and gross imports which measures the degree of retaining of gold by China.

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China Gold Imports from Hong Kong Double in February 2013

It was about time that China made use of the unbelievable low price of gold.

China imported 97 tonnes of gold from Hong Kong.

Net imports were 61 tonnes.

This makes the ratio go from 38% in January 2013 to 61/97 = 63% in February, almost as high as in December 2012 when it was 74%.

This is a huge increase. So people are buying on this news. Gold almost went back up to $1600/ounce today.

Chart 1: China Gold Imports from Hong Kong

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China Gold Imports from Hong Kong Disappoint

China gold imports plunged in January: 51 tonnes. This was not expected, considering the low gold price in January 2013 ($1660/ounce). The result was a 5% decline in the gold price in February ($1580/ounce).

Chart 1: China Gold Imports from Hong Kong

Net imports were 19.58 tonnes. That's 19.58/51.3 = 38%. That's a steep decline from the previous month, which was 74%.

I don't expect February to be much better as we have the Lunar New Year and a shorter month.

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China is buying gold on discount for Christmas Solden

We have very good numbers on gold buying from China out today. Gross gold imports doubled in a month time to 91 tonnes and the reason is of course lower gold prices in November 2012. The Western manipulators are shooting themselves in the foot by manipulating gold, because this way China can increase its holdings at a much faster pace.

Chart 1: China Gold Imports from Hong Kong

But let's look at the net imports too, because gross imports don't tell anything.

Net imports were 62 tonnes in November 2012, up from 24 tonnes in October 2012. That's 62/91 = 68% of gold that China bought, excluding gold going from China back to Hong Kong. That's an increase from the previous month October 2012 where the percentage was only 50%.

So that means, China is buying with both hands now. I wonder what will happen in December, as the price of gold got crushed in December 2012. Probably even more buying!

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China Gold Imports Down in October 2012

China imported less gold from Hong Kong in October, the lowest since March 2012: 47.48 tonnes.

The net imports of gold from Hong Kong to China were 47.48 - 23.6 = 23.88 tonnes. This is 23.88/47.48 =   50% of gross imports. The previous month we had 60% net imports from Hong Kong to China.

So not only did China import less gold from Hong Kong, it also exported more of its gold back to Hong Kong compared to its gross imports. Looks like China isn't interested in gold lately.

It also partly explains the drop in the gold price starting in October 2012.

Chart 1: China Gold Imports from Hong Kong October 2012

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Positive Numbers on China's Gold Imports from Hong Kong

Finally we have some good news for gold, which also triggered a massive rise in the gold price today.

China imported 69.71 metric tonnes of gold in the month of September 2012, which is a 30% rise.

Chart 1: China Gold Imports from Hong Kong

Net exports from Hong Kong to China were 13% lower on the year, which means they are at 42 metric tonnes as net exports a year ago were 50 metric tonnes.

If we compare this 42 metric tonnes net exports to the 69.71 metric tonnes of gross exports from Hong Kong to China, we have a ratio of 60%, which is actually a pretty good number. It means China is really taking almost all the gold and exporting a little bit of gold back to Hong Kong.

Chart 2: Net Exports of Gold from HK to China

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China Gold Imports from Hong Kong Plunge

According to the Chinese government gold imports in the month of August 2012 plunged to 53.5 metric tonnes from 76 metric tonnes a month earlier. As you can see this is a significant drop. It can be partially attributed to the increased production of Chinese gold because China produced 41.4 metric tonnes in August, which is 12 metric tonnes more than the average of 30 metric tonnes of gold produced per month in China since 2012.  China produced 250 metric tonnes of gold since 2012.

Chart 1: China Gold Imports from Hong Kong

If we look at net gold imports from Hong Kong to China on balance, we have 29.3 metric tonnes of net imports, which is back at the lows of January 2012 (Chart 2). Far less than the net imports in April - July 2012.

At least it is still in line with the 2012 numbers, but I had hoped China would buy more gold.

Chart 2: China Net Gold Imports from Hong Kong

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China Gold Import from Hong Kong Positive in July

Very important trend reversal in July.

We thought the gold imports of China were declining, but in July 2012 the trend has gone to the upside once again. July gold imports from Hong Kong were 75.84 tons to be exact.

Chart 1: China Gold Imports from Hong Kong

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China Gold Imports drop another 10% in June 2012

China Gold Imports have dropped another 10% from the previous month.

Although we see decreasing demand from China for gold, China says it will keep buying more this year as the precious metals market is set to grow throughout the second half of this year. Analysts say physical demand is still strong.

Chart 1: China gold imports from Hong Kong

Instead, China is buying more and more U.S. treasuries.

Chart 2: China U.S. treasury holdings

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China May 2012 Gold Imports from Hong Kong Still in an Uptrend

A little update on China's gold imports from Hong Kong. For May 2012, China imported 75.6 metric tons from Hong Kong. Pretty disappointing if you ask me, but the trend is still going up. The May 2012 imports are a sixfold increase from a year earlier, but down from April 2012's record.

Chart 1: China Gold Imports from Hong Kong

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China is Buying Record Amounts of Gold

As I already feared, China is scooping up all the gold in the world and is becoming the foremost gold buyer in the world. Trying to get more and more exposure to the reserve currency status.

Today it was released that China imported approximately 104 tonnes, a staggering amount of gold!

The chart looks something like this:

Chart 1: China Gold Imports

From Shanghai Daily:

GOLD imports by China's mainland from Hong Kong rose 65 percent to a record in April, up for a third straight month as investors sought a hedge against financial market turmoil and an economic slowdown.

Shipments totaled 103,644.5 kilograms in April from 62,913 kilograms in March, according to export data from the Census and Statistics Department of the Hong Kong government yesterday. In the first four months, imports were 239,174 kilograms from 27,114 kilograms a year earlier, according to Bloomberg News calculations. China doesn't publish such figures.

Increased imports by the second-largest consumer after India may help extend a rebound in the precious metal that's been driven by speculation the US Federal Reserve may add to stimulus this month to boost the recovery. Spot gold rallied 4.1 percent on June 1 after US jobs data missed hopes. China's central bank may also be boosting holdings, saidWang Xinyou, a senior analyst at the Agricultural Bank of China Ltd.

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Rising U.S. Trade Deficit for March 2012

The U.S. trade deficit has widened to $US 50 billion in March 2012. The trendline since 2009 up till now has been pointing to widening trade deficits (Chart 1).

Imports were probably higher due to more expensive oil imports, while exports have slumped (Chart 2).

Chart 1: U.S. Balance of Trade

Chart 2: U.S. exports

Incidentally, the U.S. dollar cash index is again pointing down just recently (Chart 3), despite problems in Europe. The dollar index spot (DXY) is currently at 79.5. If this index continues to fall, I predict that imports will go up even more in the future as the U.S. dollar loses purchasing power. Accompanied by the devaluation of the U.S. dollar, will be an ever more rising trade deficit.

Chart 3: Dollar Cash Index

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