Perth Mint increases gold export to China by $11 billion.
China is amongst the world’s biggest producers of gold, however it doesn’t seem like they are producing enough gold to satisfy the Chinese’s’ hunger for the yellow metal. One of the biggest exporters of gold to China is Australia. The country has seen a surge in the export of gold to China in the past couple of years. Last year alone, Australia’s Perth mint sold $11 billion worth of gold to China and the demand is not showing any signs of slowing down.
To meet the China’s gold needs, Perth Mint buys gold from countries like New Zealand and Papua New Guinea. This is refined to Perth Mint’s signature 99.99 percent gold. This demand has brought some hope for small scale miners and other gold hopefuls.
Why China prefers Australian gold?
The Chinese have had a strong relationship for centuries. The country prides itself as being the number one producer of gold in the world. But it is also the biggest user and exporter of gold in the world. But what is China doing with all this gold.
In the first half of this year, China produced 240 tons of gold, however China uses 330 tons of gold in jewellery alone. The demand is far more than the supply. To meet these demands, they need 2.5 times the amount. The problem with China is that most of the mines have reached the end of their productivity. The need for more gold is affected by China’s economy and the growth of the middle class. Environmental factors also play into the industry as the government seeks to curb the destructive nature of mining to the natural resources.
India was at one point the strongest gold exporter however the Indian Government introduced stringent import tariffs in 2011 and Perth Mint, which used to import a lot of its gold to India started looking for other markets. In 2014, the Perth Mint became the first refinery outside of China to get a Shanghai Gold Exchange accreditation. The Perth Mint works with seven of the 13 banks in China that have import licenses.
Australian Gold is the best gold in the world because it has special attributes like low PGM content. Compared to South African gold for instance that has a lot of these platinum group metals. Perth Mint also utilizes state of the art technology in its refining method. They use the Miller gold refining method that also uses chlorination and electrolytic refining.
In 2011, the mint was only exporting 100 tons of gold, now that figure has skyrocketed to $11 billion. The question is, what are they doing with all that gold? Does China know something that the rest of the world doesn’t know yet or is it a case hedging their money and wealth to protect it from economic upheavals? There has been a lot of negative talk coming from the U.S. with President Donald Trump pledging to curb Chinese imports into the U.S. China might be preparing for something big. Speculation has been that the government is working towards a new gold standard or a gold backed currency.
Source 2: https://www.perthmint.com/aus-gold-shining-in-chinese-market.aspx