* Beijing is 3rd mainland gold import point, after Shenzhen
* China's gold imports from Hong Kong surged to $53 bln in
* China's central bank has been adding to official gold
reserves - WGC
By A. Ananthalakshmi
SINGAPORE, April 21 China has begun allowing
gold imports through its capital Beijing, sources familiar with
the matter said, in a move that would help keep purchases by the
world's top bullion buyer discreet at a time when it might be
boosting official reserves.
The opening of a third import point after Shenzhen and
Shanghai could also threaten Hong Kong's pole position in
China's gold trade, as the mainland can get more of the metal it
wants directly rather than through a route that discloses how
much it is buying.
China does not release any trade data on gold. The only way
bullion markets can get a sense of Chinese purchases is from the
monthly release of export data by Hong Kong, which last year
supplied $53 billion worth of gold to the mainland.
"We have already started shipping material in directly to
Beijing," said an industry source, who did not want to be named
because he was not authorised to speak to the media. The
quantities brought in so far are small, as imports via Beijing
have only been allowed since the first quarter of this year,
The People's Bank of China (PBOC) is believed to be adding
to its gold reserves, according to the World Gold Council (WGC),
as it looks to diversify from U.S. Treasuries. The central bank
rarely reveals the numbers.
Gold's 28 percent plunge last year and China's record
bullion imports in 2013 sparked speculation that the PBOC has
added significant amounts of gold to its reserves, and could
likely make an announcement this year.
Central banks tend to be very secretive about their gold
purchases and sales because prices are extremely sensitive to
their trades. Rumours last year of Cyprus selling its gold
reserves to prop up finances sent the metal down more than 10
percent over two days - its biggest such decline in 30 years.
Gold has traditionally been imported from Hong Kong into
Shenzhen, where nearly 70 percent of the Chinese gold jewellery
business is located. Shanghai was opened up as a second port
Only banks are allowed to import gold into China.
Industrial and Commercial Bank of China Ltd,
Agricultural Bank of China Ltd, ANZ and
HSBC are among the 12 banks that can import gold.
China imported nearly 1,160 tonnes of gold from Hong Kong
last year, more than twice that of 2012 as the drop in prices
caused a spurt in demand.
An analysis of trade figures from data provider Global Trade
Information Services showed that China imported at least another
194 tonnes last year from centres other than Hong Kong, likely
into Shanghai, showing that direct imports have ramped up.
One of the reasons why China could be encouraging more
direct imports was because it wanted to avoid taking the Hong
Kong-to-Shenzhen route that makes its gold purchases public,
while China wants to keep the trade a secret, sources said.
"There is a view that why should people know how much China
is buying," said one of the sources at a bullion banking
operation in China. "With the Hong Kong route, there is a lot of
transparency and people can easily monitor what is going in and
Another source said the move to open up Beijing "is partly
driven by the fact that Hong Kong is perhaps a little too
transparent", but it is also to accommodate upcoming free-trade
zones and non-jewellery demand.
The Shanghai Gold Exchange, the platform for all physical
trades in China and in whose vaults importing banks store gold
across the country, was not immediately available to comment.
CAUTION ON RESERVES ANNOUNCEMENT
Besides the 1,160 tonnes of gold imported from Hong Kong
last year, China had about 428 tonnes of local production. The
WGC has said Chinese demand in 2013 was 1,066 tonnes, leaving
industry guessing about the "surplus" of around 522 tonnes, not
including the amount of direct imports.
The central bank last disclosed its gold reserves in 2009,
when it announced that its bullion holdings had risen to 1,054
tonnes from 600 tonnes in 2003.
Philip Klapwijk, managing director of Hong Kong-based
consultancy Precious Metals Insights, has said China's
official-sector purchases could have totaled 300 tonnes in the
first half of 2013, and the pace likely continued in the latter
"The major increase in gold supply to the Chinese market in
2012 and especially 2013 could be partly related to large-scale
official purchases," according to a Klapwijk-led survey for the
WGC that was released last week.
The report said while a part of the surplus was being used
for commodity financing deals, some of it could be for the PBOC
Rumours on PBOC's gold reserves range from 3,000 tonnes to
5,000 tonnes. The United States is the biggest holder of gold
reserves with over 8,000 tonnes.
Even a 1,000 tonne increase from last announced levels
could prompt a jump in gold prices, which would make the PBOC
very cautious about the timing of any announcement, said two
China gold market analysts, who didn't want to be named due to
the sensitivity of the issue.
(Editing by Muralikumar Anantharaman)