Physical demand for gold is strong

In September, #Switzerland exported 174 tonnes of #gold , an increase of 48% compared to a year ago.

Exports by destination:

1. #China 44t (22t in Sept'21)

2. #India 35 (50)

3. #Turkey 32 (0)

4. #Thailand 13 (4)

5. #Emirates 11 (2)

6. #Singapore 9 (5)

7. #SaudiArabia 7 (1)

Turkey had its strongest month since at least 2013. In general, physical gold is flowing from west to east.

On the import side, #Switzerland received 255 tonnes (+35% )

By origin:

1. #USA 36t (10t in Sept'21)

2. #Canada 28 (5)

3. #Argentina 28 (8)

4. #Australia 22 (2)

5. #Kazakhstan 19 (0)

6. #Peru 17 (15)

7. #Philipines 17 (2)

8. #Chile 9 (14)

Some gold imports consist of lower-grade doré bars, like from #Argentina (estimated grade 7%), #Australia (36%), #Chile (10%), and #Peru (16%), likely from mining operations. But #USA, #Canada, #Kazahkstan, and #Philippines have sent near 100% grade. While imports from the US were the 4th largest in this time series, gold received from the UK has dwindled considerably over the past months. However, imports from Canada and the Philippines have soared.

While the spot price for gold is determined by futures trading at COMEX, not much physical material comes to delivery. Physical trading is centered in London, but most of which consists of unallocated gold (an unsecured claim against a pool of gold). As gold is nobody else's debt, only direct physical control guarantees ownership. Futures contracts, ETF and other forms of indirect investment are subject to counterparty risk.

CONCLUSION: The movement of physical gold from west to east continues. Given recent developments in financial markets, coupled with the rise of inflation, could instigate a run on physical gold. Premia for precious metal coins over spot are increasing. In the case of silver, premia are now exceeding 100% (American Eagle 1 ounce).