Just a few weeks back, yours truly had written a blog on the Chinese imports of the yellow metal. Finally, the numbers are in. The December numbers had fallen by 62% to 38,605 kilograms or 1.36 million ounces and January’s number should also be as low due to the early Chinese New Year but could pick up afterwards. The analysts have warned not to have opinions change regarding the recent imports as the total numbers are painting a different picture altogether.

Looking at the gold demand in 2011, total imports of gold from Hong Kong into China exploded to 427,877 kilograms or 15.092 million ounces. The other significant Central Bank buyers during 2011 includes Russia (65.3 tonnes), Turkey (63 tonnes), South Korea (40 tonnes), Mexico (99.2 tonnes) and Thailand (52.9 tonnes). The addition of global demand from these five nations adds a mammoth 320.4 tonnes or 11.3 million ounces to the total.

On one hand, the global demand for gold is on a rise but the supply side of the equation seems all but bright. 2011 production from the two top gold producers including Newmont and Barrick Gold totaled approximately 12.88 million ounces, almost 15% below the total demand from China. In order for the production to meet the remaining demands of China and the other five nations above, we would have to include the 2011 estimated production from the other producers as well.

The year gone by, saw Central Banks return to the table as huge buyers of gold swamping production as demand from China, Thailand, Mexico, Russia, Turkey and South Korea was met from 6 of the top gold producers in the world. One quiet omission from the list is the demand from India, the world’s largest consumer of gold.

It is crystal clear that as Central Banks returned to the gold market in full force due to the global financial chaos and uncertainties; gold continued its march. But unknown to many is the supply and demand equation is tightening as more of the precious metal is making way towards the lender of the last resorts.

The booming demand will only serve to push up the price of gold in coming years as supply becomes tighter on Central Banks demands. The age old factor-demand/supply-determining commodities prices are back in the news and investors should be wary of the impacts.

Note: The blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.