GFMS Q1 update confirms China as world No. 1 gold consumer

by Lawrence Williams, MineWeb

If one is happy to take GFMS figures as providing a consistent ranking on global gold demand figures (although some would dispute them) we should be able to rest the argument as to which country – China or India – was the world’s No. 1 gold consumer last year and, as we have said all along, China comes out on top. Unfortunately, not that it matters that much in the scheme of things, the world’s mainstream media keeps on insisting that India retook first place from China last year, and this is all down to the preliminary figures published by the World Gold Council (WGC) back in February in its first Gold Demand Trends report of the year (based on figures then also supplied by GFMS). It will be interesting to see if the WGC publishes a correction in its next Gold Demand Trends report due out in a couple of weeks’ time, and even if it does whether the mainstream media will even take notice but just continue to rely on the earlier figure. The February estimate seems to be set in stone by them.

But we take the publication of GFMS’s first quarterly update to its comprehensive Gold 2015 annual report on global gold supply and demand to confirm China’s continuing No. 1 position with no changes made to the full GFMS table of the world’s Top 20 Gold Consumers which we published around three weeks ago (See: Top 20 gold consumers: China still No. 1 – GFMS) so we assume GFMS is now confident in its 2014 figures and is not going to adjust them again.

As we have no doubt pointed out beforehand, Chinese consumption would have been streets ahead of that for India again last year if what is described as ‘bank activity’ was included – and also if Hong Kong’s consumption was lumped together with that of the Chinese mainland – after all Hong Kong is officially an integral part of China, although classed separately in trade figures as a Special Economic Region. GFMS does note that Chinese imports of gold, and deliveries from the Shanghai Gold Exchange (SGE) considerably exceeded the quoted consumption figure owing to growth in gold leasing, increased holdings by commercial banks to back paper products (a legal requirement) and perhaps some double counting of gold due to round-tripping to Hong Kong.

Altogether the 20 nations included in the global Top 20 table account for almost 85% of total global gold consumption and, interestingly, no less than 13 of them can be classified as being in Asia and the Middle East with China and India between them accounting for 47.3% of GFMS calculated global consumption. (But again this would be sharply higher if banking activity were to be included. After all gold being imported by Chinese banks should also probably classify as consumption by our reckoning – it is certainly a major contributor to West-to-East gold flows.

GFMS Q1 also includes another fascinating table showing the Top 20 gold consuming nations on a per capita consumption basis. While India squeaks into this listing at No. 19 with a per capita gold consumption of 0.69 grams per head, mainland China doesn’t even make the Top 20. This suggests that there is the potential for a huge percentage increase in gold consumption in both these nations as per capita wealth grows given the extremely strong penchant in both countries for individuals to purchase gold as investment, jewellery or in festival-related trinkets.

This tabulation is set out below:

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