Bloomberg's latest report on Chinese gold imports is a great illustration
of a journalist's power to shape a message by highlighting certain data points
and downplaying others. Here's the article:
China
Gold Imports From Hong Kong Fall on Premium, Slow Demand
Gold shipments to China from Hong Kong fell for a second month after the
premium to take immediate delivery declined, indicating waning physical demand
in the nation poised to become the largest consumer.
Net imports, after deducting flows from China into Hong Kong, were 109.4
metric tons in September, from 110.2 tons a month earlier, according to Bloomberg
calculations based on data e-mailed from the Hong Kong Census and Statistics
Department. Still, the amount has more than doubled to 826 tons in the first
nine months of the year, the data show.
Gold prices dropped in September for the first loss in three months amid
speculation at the time that the U.S. Federal Reserve would slow its $85
billion in monthly bond purchases. The average premium that Chinese buyers
paid to take gold for immediate delivery in Shanghai fell to $8.97 in September,
compared with $13.57 a month earlier.
"Demand eased a bit in September as investment in China remained sensitive
to the gold price outlook," said Wang Weimin, an analyst at Dalian Fortune
Futures Co., before the announcement. "A lower premium was a good indicator
that Chinese investment demand slowed after more sell-offs following the
gold rout in April and in June."
Gold for immediate delivery in London traded at $1,323.91 an ounce at 10:18
a.m. Beijing time. Bullion, which dropped as low as $1,180.50 an ounce on
June 28, has declined 21 percent this year as investors reduced holdings
in exchange-traded products on prospects for a global economic recovery.
Overtaking India
China's total gold consumption this year may jump 29 percent to reach 1,000
tons, overtaking India to become the world's largest user, according to the
World Gold Council. China and India combined account for more than half of
the world's demand, according to the WGC.
Mainland buyers purchased 116.3 tons in September, including scrap, compared
with 131.4 tons in August, data from the Hong Kong government showed.
China's purchases in September were 67 percent higher than the 69.7 tons
a year earlier, according to the Hong Kong data. Mainland China doesn't publish
such data.
Exports to Hong Kong from China were 6.9 tons in September, according to
the e-mail today, compared with 21.3 tons in August and 28.2 tons in September
2012.
Bullion of 99.99 percent purity on the Shanghai Gold Exchange fell for the
first time in three months in September, dropping 4.4 percent.
Now, despite including a lot of really positive stats, the article's clear
message is that Chinese gold demand is headed down. But the same data could
have driven a completely different slant. The title of the gold-bug version
might be "Chinese Gold Demand Remains Robust," and the introductory sentence "Chinese
September gold imports exceeded 100 tons for the seventh straight month." The
article would then go on to highlight rather than mention in passing the massive
year-over-year growth in demand.
And the gold-bug's version would have included an explanation of why readers
should care about Chinese gold demand in the first place. Specifically, how
its imports compare to what the world's gold mines are producing (nearly half)
and how between them China, India and Russia are vacuuming up all the gold
flowing out of mines this year, leaving the rest of the world's gold buyers
to be satisfied from ... where? That question would dominate the last third
of the article.
And last but not least there would be a catchy visual comparing 2013 monthly
gold imports to 2012's record levels. Looking at this chart, the last word
that comes to mind is "waning."
