Chinese gold demand continues to rise Year-Over-Year

Chinese gold demand continues to rise Year-Over-Year by Lawrie Williams – Sharps Pixley

China’s Shanghai Gold Exchange, through which all gold demand transactions pass. Has just announced its gold withdrawal figures for May, and they continue to show a rising demand trend over figures released at this time in 2016 and 2017.  May withdrawals this year, for example, were 9% up on the May 2017 withdrawal figure and the cumulative total year to date is also 8.6% on a year ago when full year withdrawals amounted to 2,030.48 tonnes.  A continuation of the current trend would put this year’s total at around 2,200 tonnes or higher – the largest annual withdrawal figure since the record 2015 year when SGE withdrawals totalled just short of 2,600 tonnes.

As we have noted before there are contentious views on whether SGE gold withdrawals truly represent Chinese gold demand as they suggest figures far in excess of the Chinese gold consumption data estimated by the major precious metals analytical consultancies.  However they are much more in line with known Chinese gold imports, plus China’s own gold production, plus an allowance for scrap recycling.  China precious metals watcher Koos Jansen avers that SGE withdrawals are equal to real Chinese demand and cites figures in the China Gold Yearbook, which equate SGE gold withdrawals to true Chinese demand to support his viewpoint.

Table: SGE Monthly Gold Withdrawals (Tonnes)

Month   2018 2017 2016 % change 2017-2018 % change     2016-2018
January   223.58 184.41 225.08 +21.2%  -0.7%
February*   118.42 148.24 107.60 -20.1% +10.7%
March  192.61  192.25 183.24  +0.2%  +5.1%
April  212.65  165.78 171.40  +28.3% +24.07%
May  150.58  138.08 147.28  +9.1%  +2.2%
June    155.51 138.51    
July    144.71 117.58    
August    161.41 144.44    
September    214.24 170.90    
October    151.54  153.25    
November    189.10  214.72    
December    185.21  196.37    
Year to date   899.65 828.76 834.60 +  8.55% +7.79%
Full Year    2,030.48  1,970.37    

Source: Shanghai Gold Exchange. 

Whatever the truth of the matter, the fact that SGE gold withdrawals equate much more closely to known gold imports to the Chinese mainland from countries which detail their export statistics like Switzerland, the U.K., the U.S., Australia etc. plus gold flows from Hong Kong, suggests that the SGE figures are at worst a great guide o overall Chinese gold demand.

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Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT). He has worked in mines in South Africa (gold, uranium and platinum), Canada (uranium), Zambia (copper) and U.K (coal) and holds a South African Mine Managers certificate. He also worked as a gold mining company analyst for one of the major South African mining houses. He left South Africa to join Mining Journal as Financial Editor and worked his way through that organisation to edit Mining Magazine, and then join the Board. He was Managing Director (CEO) of the company for 13 years up until it was sold in 2001. During part of this period he was also President of Nevada-based U.S. company Mining Media Inc which was publisher of North American Mining magazine.