South Africa importing gold?

[Unbeatable]

$1 billion of gold has been shipped from New York to South Africa this year

http://qz.com/83396/1-billion-of-gold-has-been-shipped-from-new-york-to-south-africa-this-year/

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...Calls to the South African embassy in Washington, DC were not returned.

Just posted this as I thought it was interesting that the US appears to be exporting gold and that some of the gold is being imported by a country that is one of the world's largest producers of gold where the public 'are legally prohibited from importing or owning unwrought gold.' Hmm...

The article also points out that unwrought gold flown out of JFK to various destinations has doubled in recent years to 350 tons in 2012.

 

[pmbug]

What is the significance of "unwrought"? This means unminted? As in, not bars or coins?

 

[ancona]

Wrought gold is gold that has been fabricated in to an object other than bullion. This can mean jewelry, fine art, etc. I find it amusing that SA is importing gold in the first place. That's kind of like Texas and Oklahoma importing oil and gas.

I wonder if the SA government is minting it in to Krugerrands.

 

[Unbeatable]

Yeah according to the article

(Unwrought gold includes bars created from scrap as well as cast bars, but not bullion, jewelry, powder, or currency.)

The article also suggests the South African Mint/Krugerrands could be a possible destination.

Still strange though as it would surely be cheaper to get it locally, South Africa mined something like 180 tons last year and in 2011 the South African Mint only sold 750 000 ounces or about 23 tons.

 

[DoChenRollingBearing]

...

That is quite a story Unbeatable! Who would have guessed? South Africa is now, what No. 3 in gold production?

A billion dollars worth of gold just to make Krugerrrands sound pretty high...

 

[bushi]

(...)Still strange though as it would surely be cheaper to get it locally,(...)

...why the implicit assumption? (I am just thought provoking )

...it might very well be, that obtaining gold from "we buy gold" shops or otherwise, is actually cheaper than mining it - if the price is low enough - the mining costs are rather non-flexible, and rather ignoring the spot prices .
Obviously, it cannot go on forever, but it can go on for a while - possibly, putting less profitable miners out of business in the process, or forcing them to shut production of less profitable mines.

...all the better for the shiny stuff in the long run, if some of the mines GET closed, tightening the supply further. It takes more risk, time and capital to reopen them, and nobody will take the risk without a strong reward incentive (ie, higher spot price would be required to reopen it, than to keep it running)

 

[rblong2us]

could it be to meed demand that the big miners previously promised and are now unable to meet due to strikes, power shortages general cost rises ?

 

[benjamen]

I was actually on a call yesterday that was discussing a gold miner that wanted to ship his gold bars to South Africa because their mint would take his gold and produce Krugs for him. Perhaps this is simply people shipping bars of gold in, paying a fee, and getting well recognized coins in return?

 

[Unbeatable]

Who would have guessed? South Africa is now, what No. 3 in gold production?

I just checked Wiki, apparently South Africa was 5th in 2012. (4th: Russia - 205t; 3rd: USA 230t; 2nd: Australia 250t and 1st: China 370t)


Anyway I think I may have solved my own riddle. The answer is in a way related to what Rblong2us, Bushi & Benjamin suggested. - The Rand Refinery has a huge capacity because South Africa used to be the biggest gold producing/mining country in the world but because output has declined drastically in the last 20 years & a lot in the last 2/3 they are looking overseas for business.

From their 2012 annual report

We will exploit opportunities to expand into South and North America, the Middle East and Asia by: Gaining access to scrap markets; Sampling and assaying of scrap and doré at source, before shipping to South Africa.

Given that the South African gold mining industry is in decline, it is vital for the sustainability of our business that we attract customers, source materials and develop partnerships beyond the borders of our country and our African heartland. Our plan includes establishing footprints outside Africa and we have made progress with the establishment of our trading and soon-to-be assaying office in Singapore.
We have made excellent progress in establishing key customer relationships in North America for the sourcing of low-grade material containing gold and silver. The possibility of establishing sampling and evaluation facilities in North America is also being explored as well as the feasibility of increasing the grade of the sourced material prior to its delivery to Rand Refinery in South Africa for smelting. This would enhance the operational efficiency of our smelter substantially.

 

[nysparkie]

I just checked Wiki, apparently South Africa was 5th in 2012. (4th: Russia - 205t; 3rd: USA 230t; 2nd: Australia 250t and 1st: China 370t)


Anyway I think I may have solved my own riddle. The answer is in a way related to what Rblong2us, Bushi & Benjamin suggested. - The Rand Refinery has a huge capacity because South Africa used to be the biggest gold producing/mining country in the world but because output has declined drastically in the last 20 years & a lot in the last 2/3 they are looking overseas for business.

From their 2012 annual report

Reports out there are the Fed (Gutterment?) dumped 400 tons of short Gold on the market which started this recent slide. Could be they sent it to SA to refine it into bullion (Under the radar?) to reposition their inventory. ??

http://www.zerohedge.com/news/2013-04-15/gold-crush-started-400-ton-friday-forced-sale-comex

 

[Unbeatable]

Hi NySparkle,

No I dont think the two are related.

The 400 tons that was sold on the futures market which drove the paper price of gold down recently was just a $ position, not real gold. As the article you reference states -

. The value of the 400 tonnes of gold sold is approximately $20 billion but because it is margined, this short bet would require them to stump up just $1b

An entity would need a billion dollar 'margined position' to dump the equivalent of 400 tons of gold on the futures market. in other words they dont need ANY actual physical gold, let alone the $20 billion dollars of physical gold their trade is representing, so they dont need to worry about moving any gold to SA under the radar etc. imo.