Why Has $1 Billion in Gold been Shipped from New York to South Africa?

In what may be the strangest story I have seen in a while related to the gold market, it appears $982 million worth of gold has left JFK international airport in New York to some undisclosed location in South Africa.  While it remains unclear what purpose this gold serves, it seems the most likely explanation is to fulfill demand for Krugerrands (South Africa’s popular gold bullion coin) to meet elevated demand in the face of constricted mine production.  This story is timely coming on the heels of the article I posted yesterday about how Dubai’s gold demand is running at 10x normal levels.  This is a bizarre story, so if anyone has further color I’d love to hear it.  From Quartz:

Examining US trade data, we were surprised to see that South Africa’s $402 million trade surplus with the United States in January had turned into a $689 million deficit by March. Why?

It turns out the $1.1 billion swing is entirely due to unusual shipments of gold from the US to South Africa in February and March. So far this year, 20,013 kg of unwrought gold, worth $982 million, has left John F. Kennedy International Airport (JFK), in New York, for somewhere in South Africa, according to the US Census Bureau’s foreign trade division. (Unwrought gold includes bars created from scrap as well as cast bars, but not bullion, jewelry, powder, or currency.)

The shipments from JFK were the only unwrought gold to leave the US for South Africa in 2013; another large shipment occurred in September 2012.

However, the strikes that rocked South Africa’s mining industry last year briefly caused gold output to fall sharply, around the same time as last autumn’s big gold shipment from JFK. Overall 2012 production declined by a relatively modest 6% (pdf) over the year before, according to a preliminary figure from the US Geological Survey; but those first estimates have sometimes proven wide of the mark. (In 2009 the USGS estimated South Africa’s 2008 production to be 250 tons; it subsequently revised the figure to 213 tons.) So it could be that the strikes dealt a more severe blow to the country’s gold industry than the data show.

Still, even if gold output did fall precipitously, it’s not clear why South Africa would need to start importing it. One possible destination for the gold is the South African Mint, which produces legal-to-own gold coins called Krugerrands; the gold used in them is first refined by the Rand refinery. Calls to the South African embassy in Washington, DC were not returned.

Meanwhile how about this chart, courtesy of the Quartz article.

GoldfromJFK

 Full article here.

In Liberty,
Mike

 

5 Comments

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  1. …got to keep the mints up and running. If they have prolonged shortage of gold to fashion their coins, that would signal to the market that there are supply issues and inventory is becoming less available.

    Now, we wouldn’t want anyone to think that gold is evaporating into private hands, would we?

    The truth is, precious metals are steadily being removed from the open market. Eventually these metals will be hoarded and not released back into the market until the price rises significantly.

    How high would the price be for you to surrender your physical metal? What do you think you would get in exchange for this metal after the price has risen? A fistful of paper fiat dollars that are still losing value?

    Nope, you’d probably hold onto your metal until the market reached an equilibrium. You might sell some on the way up, but most of it will stay hidden as part of people’s long term wealth strategy.

    This is going to get interesting, eventually. In the meantime, we’re all practicing patience – not a bad quality to have to learn…

  2. According to may wifes Uncle [(CFR), 3 Star Gen. – USAF, Ret.] many criminal elites ( Bankers and Politicians ), are building underground bunkers in Africa, ASAP. – Google Earth, Kenya.

  3. Wouldn’t be a bad gold scab to the SA Miners either,
    If this wasn’t sheepie nation, I am sure Hormel would have imported Salamis from Italy when they were being struck.

  4. It seems that South Africa’s mining capacity has fallen and they are actively seeking foreign sources of scrap gold for the Rand Refinery:

    http://www.pmbug.com/forum/f2/south-africa-importing-gold-2379/#post21727

  5. Apparently the destination of the gold was Rand Refinery, which is the largest in the world. Perhaps the gold was being re-refined to create bullion quality?

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