THE DRAIN CONTINUES: U.S. Exports More Gold To Hong Kong Than It Produces

As the Federal Reserve continues to prop up the highly leveraged debt based financial industry, the flow of U.S. gold heading East picked up significantly.  According to the USGS most recently released survey, Hong Kong received 56% of total U.S. gold bullion exports in September.

Actually, U.S. gold bullion shipments to Hong Kong where so large they exceeded its total domestic mine supply in September:

U.S.-Gold-Exports-To-Hong-Kong-vs-Mine-Supply-SEP-2015

As we can see, the U.S. exported 19.3 metric tons (mt) of gold bullion to Hong Kong, while its total domestic mine supply was only 18.7 mt.  The other top sources of U.S. gold exports were:

Switzerland = 11.4 mt

United Kingdom = 6.9 mt

India = 5.7 mt

U.A.E = 1 mt

Not all of U.S. gold shipments were in bullion form, some were exported as dore bars.  Dore bars are semi-pure gold bars poured at the mines requiring additional refinement.  India received 5.6 mt of gold dore bars from the U.S. while Switzerland imported 4.3 mt and the U.A.E, almost one metric ton.

That being said, the U.S. continues to export more gold than it imports or produces from domestic mines.  For the first nine months of the year, the U.S. suffered a 24 mt deficit as it exported 380 mt of gold versus 155 mt from its domestic mine supply and 201 mt it received in gold imports:

U.S.-Gold-Exports-vs-Imports-&-Mine-Supply

Not only is the U.S. exported more gold than it produces, Australia is doing the very same thing.  Of the 214 mt of gold exported from Australia during the first nine months of the year, China (and Hong Kong) received 136 mt or 64% of the total.  Total Australian gold exports went to the following countries:

Australian Gold Exports (Jan-Sep 2015):

China  = 136 mt

Singapore = 34.7 mt

India = 15.4

Thailand = 12.2 mt

United Kingdom = 6.4 mt

Total Australian gold mine supply during this period was only 205.2 mt (source: Australian Government Resources & Energy Quarterly Report).  Even though Australia does import gold, here is another example of a Western country exported 100%+ of its domestic mine supply to the East.

Why is this interesting?  Because two of the top four gold producing countries in the world exported the majority of their gold supply.  Let’s look at the top four gold producing countries below (wikipedia):

Top 4 Gold Producing Countries 2014:

China = 450 mt

Australia = 270 mt

Russia = 245 mt

United States = 211 mt

We know that all of China’s gold mine supply stays in the country, so does the majority of Russia’s.  However, Australia and the United States exports the majority of their domestic mine supply.  Which means, the East continues to trade worthless fiat money or U.S. Treasuries for gold while the West manufactures more paper derivatives and debt.

Unfortunately, this is not a sustainable financial or economic business model for the West.  While precious metal investors are frustrated by the low paper price of gold and silver, there is light at the end of the tunnel.  I explain this in a recent interview with Crush The Street.  If you have not watched the interview below, I highly recommend it:

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25 Comments on "THE DRAIN CONTINUES: U.S. Exports More Gold To Hong Kong Than It Produces"

  1. Hi Steve I was listening to this interview…”America’s Ship Is Sinking” Former Bush Official Exposes The Unfixable Corruption Inside The Establishment over @
    http://www.zerohedge.com/news/2015-12-20/americas-ship-sinking-former-bush-official-exposes-unfixable-corruption-inside-estab
    He states at one point that we have used so many bombs and missiles that the defense contractors are salivating at the prospect for resupplying. I had this thought so I googled it…https://www.google.com/?gws_rd=ssl#q=cruise+missile+contain+silver+content. Could this account for why we are importing more silver than makes sense?

    • jsauai,

      There could be some increase in Department of Defense demand for silver, however the U.S. Navy plans on ending purchases of the Tomahawk Cruise Missile in 2016. According to the article:

      U.S. Navy Plans to End Tomahawk Purchases

      On March 4, Navy spokeswoman Lieutenant Caroline Hutcheson publicly confirmed that the Navy had made substantial reductions in the number of Tomahawks it planned to purchase.[1]

      In FY 2014, the Navy bought 196 Tomahawks, but in its proposed budget for FY 2015, the Navy plans to buy only 100 missiles and none thereafter. Instead, it will shift investment to a next-generation system and, beginning in FY 2019, will establish a recertification program for its stockpile of approximately 4,000 missiles.

      ————–
      As you can see, they already have a stockpile of 4,000 missiles. Regardless, the Tomahawk uses about 480 oz of silver for each missile. Even If the Navy bought 1,000 of these missiles (they are only getting 100 in 2015), that would only consume 480,000 oz of silver or, 15 metric tons of silver.

      The U.S. imported nearly 800 metric tons more silver JAN-SEP 2015 compared to last year. So, I doubt the majority of this extra U.S. silver imports are going to Dept of Defense manufacturing.

      steve

      • I’m pretty sure that “480 oz of silver per tomahawk cruise missile” was proven to be a hoax a while back. Sorry if I am mistaken. Do you have a reliable source for this estimate?

        Mike

        • lastmanstanding | December 23, 2015 at 8:33 am | Reply

          I think your right Mike.

          However, what we do know is that a tomahawk will never leave the ground or kill another human without it.

  2. OK Steve thank you, I get your response. My idea is that we don’t really know what the defense contractors have going on in regards to future weaponry projects. I would guess that this kind of information would be classified. If I were a defense contractor needing silver for future projects I would be stockpiling silver while the supply is cheap and available. Of course this is just speculation on my part.

    • Steve you said “So, for whatever reason… there is more silver coming into the U.S. than the market dictates. Of course, physical silver investment demand is much higher this year, but it doesn’t account for all the extra silver imports. Thus, some large entities must be acquiring silver off the radar.” Could it be defense contractors?

  3. Superb effort and worth at least 2 listens….actually already went back on at least 3, a couple at least 3x.

    Your mix of charts has typically been outstanding, now your analysis in on or nearing on the same stage.

    Kudos and time to pay my pal

  4. Steve,
    You wrote, and I agree with,
    “Which means, the East continues to trade worthless fiat money or U.S. Treasuries for gold…”

    However, I think the balance of your sentence,”while the West manufactures more paper derivatives and debt.” while being accurate in the overall, is no longer reflective of the trend with regard to China.

    From the United States (and to a lesser extent from other western nations) China and other eastern nations receive a small amount of manufactured goods plus commodities which include gold and silver.

    From China, the United States receives a greater amount of manufactured goods than it exports, and it receives back it’s own T-Bills to cover the balance due.

    The U.S. continues to manufacture more derivatives and debt, but the U.S. is apparently buying all of the new debt plus all of the returning debt instruments. I don’t think any other government is buying that stuff, and no private individuals are buying it. I could be wrong but I think that any purchasing entity other than the U.S. government is likely to be sponsored or supported by the government. In any event, the debt is “coming home to roost.”

    To paraphrase Rob Kirby, “sovereign nations and other deep-pocketed entities are actively searching to buy large quantities of precious metals (and rare art which also has a perceived “real” value,) and those buyers have funds to continue buying such that available gold and silver supply will run out before those buyers’ money runs out.”

    In times past, gold was bought or sold to balance the trade between countries. Now, China is focusing on buying two categories of things, gold and western real estate. China wants to divest itself of U.S. debt instruments, so it uses it’s owned U.S. debt instruments to balance the trade.

    China’s recent devaluing of their currency surely must go along with their intention to increase exports so that they don’t NEED to take any dollars to balance the equation.

    Side story:
    I also see it as ironic and perverse that as wealthy Chinese buy more and more western real estate, and to do so they usually outbid local buyers, they greatly raise the prices that the next day’s buyers have to pay. They essentially don’t care what they have to pay, as they just focus on getting into an investment where hot money is driving up prices, and they want to get their money out of Chinese yuan in part because it is going down in value.

    The takeaway that I get from all of this is that it makes sense for Americans and probably all other westerners to invest in gold and silver. The wealthy people in the east are buying silver and gold, and it is easier for them to do that as compared to buying foreign real estate. There are all sorts of reasons that buying silver and gold is prudent and smart, yet very few westerners are buying. If you have a ton of money, you could buy a house in Vancouver, British Columbia, or any one of many other cities with sky-high real estate values. Or you could stack silver at your own pace, and in your own place, and have very little counter-party risk.

    Charley Z

    • But the USA make the same.Not everything is as bad as you explain it here.
      Deep, big american pockets buy a lot of good european(german) companys.

  5. Steve, I can already see that I didn’t do well at the start of my post. I wanted to clarify and expand on your sentence, and did not properly address the fine points. Still, I trust that some readers will glean something of value from the post.

    • Charley Z,

      I understand the points you were trying to make. Now, when I say “worthless fiat money”, I am not just talking about U.S. Dollars. That being said, the days of the Fed buying all the new debt are limited. Unfortunately, for Americans, when this charade stops, it will end quite badly.

      steve

  6. Hi Steve,

    What do think of the blogger kid dynamite?

    • Adam,

      While he says and writes some interesting things, he is typical of those analysts that do not factor in energy into the equation. He looks at the world with blinders on.

      steve

  7. Steve I have tried several times to donate but PayPal is not recognizing SRSroccoreport.com. What is the valid email or account number.

    Thanks
    KC

  8. https://www.youtube.com/watch?v=TPXcQWRYESk

    I think like these guys when it comes to oil. I don’t think silver or gold are comparable to oil though.

    • Bonifaci,

      Forgive me for being blunt about that those two guys in that video… but I have to. I had to laugh when the oil guy starts off the interview by saying how tough it was in the industry now that the price of oil was low, and then he goes on to say that peak oil is a scam.

      LOLOLOLOL… truly hilarious.

      I don’t care if oil is abiotic or not, THE MATH SHOWS that the U.S. Shale oil industry is currently producing oil at an EROI – Energy Returned On Invested of 5/1 compared to 30/1 in the 1970’s and 100/1 in the 1930’s.

      The majority of Shale Oil Companies didn’t make any money when oil was $100. If oil wells were refilling, companies wouldn’t be going bankrupt drilling LOW QUALITY SHALE OIL OR TAR SANDS.

      It’s a shame these individuals put our garbage such as this. It confuses people.

      steve

      • I agree with you here. My theory is abiotic oil is produced by the earth but at a pace that is too slow compared to human consumption at our current economic situation.

        The guy in the vid says there’s plenty of oil very deep and he ignores the EROI factor there, so that well he talks about is non existent in practice.

        Thanks for your reply 🙂

  9. Thanks Steve for all you do and Happy Holidays

  10. The commercial category (mostly hedge funds) of gold on the COMEX according to the latest traders report, has the highest historical amount of paper gold shorts ever. As JPM keeps vacuuming up any and all loose physical gold and silver for it’s house account. What does this tell you?

    Merry Christmas and a healthy, prosperous New Year Steve and to all the talented commentators.

  11. Steve,

    I’m not sure how your numbers match up. Please explain.

    Per your article, “As we can see, the U.S. exported 19.3 metric tons (mt) of gold bullion to Hong Kong, while its total domestic mine supply was only 18.7 mt. The other top sources of U.S. gold exports were:

    Switzerland = 11.4 mt

    United Kingdom = 6.9 mt

    India = 5.7 mt

    U.A.E = 1 mt”

    So how does 19.3 (gold to Hong Kong) divided by 44.3 (total exports) equal .56 (56%)
    (Amount of US gold exports you claim goes to Hong Kong). Something does not seem to add up.

    • AW,

      As I mentioned in the article, the U.S. exports “Gold Bullion” & “Dore Bars”. Of the total 34.4 mt of gold bullion exported that month, Hong Kong received 19.3 mt, or 56%. The remaining gold exported was in the form of Dore bars, which totaled 10.9 mt.

      Hong Kong did not receive any gold dore bars (and hasn’t all year).

      steve

  12. https://youtu.be/aJnyZWQbV8I

    If what this guy says is right, then stackers are the most right motherfuckers of the galaxy lol

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