Where has all the gold gone? According to Bloomberg’s Kenneth Hoffman (see link for video interview), previously filled vaults in London a few years ago are virtually empty and tens of millions of ounces have been transferred to Switzerland to be recast into a higher grade before being shipped off to Hong Kong and then into China.
The International Business Times recently reported that Swiss-based refinery Argor-Heraeus, one of the biggest in the world, saw about 70% of its kilobar production shipped to China.
Switzerland’s gold imports and exports are hardly transparent, with gold data being reported quarterly without disclosing where the gold came from or in fact was going to. Thankfully that’s about to change early in the New Year when imports and exports will be broken down by country.
China will no doubt remain the wildcard in global commodities consumption, confounding analysts who only recently reduced their price projections for important industrial commodities such as iron ore and copper.
These are both bellwether metals for growing industrial activity in the construction and manufacturing sectors, most notably in the housing and auto industries. It’s worth remembering that the steel industry also uses large quantities of metallurgical coal and alloying agents including nickel, molybdenum, cobalt, chromium and a host of others. These can often move individually or in tandem with iron ore prices.