by Lawrence Williams,


Global new mined gold supply approximately 3,100 tonnes a year or averaging 258 tonnes/month: Shanghai Gold Exchange (SGE) gold withdrawals in January 255 tonnes! The figures speak for themselves.

Forget GFMS China gold consumption figures, we just don’t believe they are even close to reality. Forget the latest Reuters report on Chinese gold demand published here on Mineweb on Friday – it just quoted the same figures although it attributed them to another source. As we’ve pointed out here before these figures just don’t add up. Even if we take acknowledged Hong Kong net gold exports to China, which we know to only provide a partial record of Chinese gold imports – perhaps around two-thirds – which are known from official Hong Kong figures to have totalled 750 tonnes in 2014, and add to that China’s own gold production of some 460 tonnes last year and we come up with a total of 1,210 tonnes already. Where is all this gold going if it’s not being consumed by the Chinese market? We know China isn’t exporting gold.

If we are correct in our approximation of one quarter to one third of Chinese gold imports now entering the country direct rather than via Hong Kong (and this is borne out by official export data from Switzerland and the USA) we come up with a minimum total of gold supply to the Chinese market of perhaps between around 1,350 tonnes and  1,500 tonnes which is hugely above the GFMS estimates, which appear to be based on reports from Chinese industrial sources and jewellery fabricators and other diverse sources, rather than officially published figures. This suggests that the GFMS statistics have an enormous potential for undercounting. If one adds in an estimate for recycled scrap supplies and supplies from gold refining from directly imported gold and base metals concentrates we come up with a figure far closer to last year’s SGE officially announced gold withdrawal figure of a little over 2,100 tonnes. Again, where is all this gold going if it is not being consumed? It is more than double the GFMS figure of 886 tonnes which is an enormous disparity.

What we do know from the latest SGE figures, which showed that withdrawals from the exchange came to almost 54 tonnes last week, is that supplies to the Chinese market from the exchange in January amounted to a new record for the month  – around 4% above last year’s previous January record.  With the Chinese New Year, which is the principal stimulus for the high gold demand, still two weeks away, SGE of  for the first half of this month are also likely to remain very high, but may fall away thereafter as we saw last year.

What we have to assume from the above is that Chinese gold consumption is far, far higher than the estimates supplied by mainstream analysts on which much of the institutionally gold dominated futures market would appear to depend.  Whether there is a hidden agenda here is the subject of much discussion within the pro-gold sector, but we suspect that it largely the result of perhaps reliance on independently gathered data and a reluctance to take official statistics at face value.  That it may not be being taken that seriously by the institutional market though seems to be belied by the recent purchases into the big gold ETFs, although these may now well be dented by the big gold price drop seen on Friday after the latest U.S. jobs data which is taken as suggesting that the U.S. Fed will start raising interest rates by the middle of the year.


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