Why is Asia able to acquire massive tons of physical bullion at such favorable prices?

”Gold fell for the first time in four sessions in New York, set for its biggest annual loss in three decades, as an improving economy cut demand for a protection of wealth.  Silver futures also retreated.

Bullion slid to $1,186 an ounce on Dec. 19, near this year’s low set in June, before rebounding to a one-week high of $1,218.90 on Dec. 27.  Global equities traded near the highest since 2007 before reports this week that may show improvements in U.S. housing and manufacturing.

‘We’re seeing improving economies with little or no inflation,’ Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago, said in a telephone interview.  ‘The fear has been stripped out of the market, and absent inflation, I think we’ll see gold continue to grind lower into next year.’

Gold futures for February delivery fell 0.6 percent to $1,206.20 at 10:34 a.m. on the Comex in New York.  Trading was 46 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Through Dec. 27, gold tumbled 28 percent this year, set for the worst annual plunge since 1981.  Some investors lost faith in the metal as a store of value amid a rally in equities and an improving economy, which prompted the Federal Reserve to pare its $85 billion in monthly bond purchases.  Holdings in exchange-traded products backed by bullion dropped 33 percent this year to the least since 2009, data compiled by Bloomberg show.

‘The market is fearing the impact of tapering,’ Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by telephone.  ‘You have firmer equity markets.  There’s currently no crisis and nothing that would induce investors to rush into gold.’ ”