CHINA June 27 2014 3:01 PM
SHANGHAI (Scrap Register): China's gold imports from Hong Kong dropped significantly to 52.3 metric tons in May, lowest since last January, and could drop further said analysts as a metal trade financing scandal spreads from copper to include the precious metal.
The world's biggest bullion consuming nation China's gold imports through Hong Kong, its primary route for bullion import, totaled only 52 tons in May, down by more than 20% month-on-month.
China's auditor general has meantime uncovered CNY 4.4 billion ($15.2bn) of what he calls “fictional” trades used to borrow money against gold bullion since 2012, echoing trouble in copper, where the same underlying metal has been used multiple times as collateral for loans.
Chinese Gold Imports to Fall in the Short-Term
The Chinese national auditor has recently found that gold has been pledged multiple times in about $15 billion of financing deals. The authority clamp-down on gold use in financing will likely slow down Chinese gold imports from Hong Kong in the short-run, which have already fallen 20% in May from April.
Still, both the China Gold Association and the World Gold Council expect the Chinese gold consumption to be above 1,000 metric tons in 2014 due to rising incomes and the need for insurance.