CHINA: SGE Gold withdrawals head for huge new record year

By Lawrie Williams

Although Shanghai Gold Exchange weekly withdrawal figures seem to have fallen back a little from their heady July/August/September heights, when at times over 70 tonnes of physical gold were taken out of the Exchange’s vaults in a single week, this year’s total is still heading for a huge new record high.  Total withdrawals so far this year to the end of last week (Dec 4th - the SGE reports withdrawals a week in arrears) have amounted to just under 2,405 tonnes after a figure of 42.6 tonnes in the latest reported week.  The record full year withdrawals figure was back in 2013 when 2,181 tonnes were withdrawn – a figure which was already surpassed several weeks ago and with virtually four weeks of withdrawals still to come this year the full year total looks to be heading for the high 2,500s – perhaps 400 tonnes more than in the previous record year.  For reference the full year SGE withdrawals figure for last year was 2,102 tonnes.

SGE withdrawal figures do remain running well in excess of known Chinese gold imports plus domestic production so far this year (See: 2016 a crunch year for physical gold supply).  The linked article suggests total supply of only around 2,100 tonnes for the full year (which includes a perhaps conservative estimate of around 200 tonnes from scrap sources).  However China is extremely reticent about reporting all its import and gold supply figures, so it is conceivable the actual figure could well be higher still perhaps bringing it closer to the SGE withdrawals metric.  But be that as it may, and given the huge discrepancy between the SGE figures and those for Chinese domestic gold consumption from the major analytical consultancies, if one just looks at comparative SGE figures they have to provide a great guide to the trend in Chinese domestic gold flows and these gold flows have thus been trending sharply higher this year.  With the Chinese economy continuing to grow, even though at a much slower pace, it would not be unreasonable to assume Chinese gold demand will continue to grow alongside the nation’s GDP.  It will thus be interesting to see what next year brings.

11 Dec 2015

About the author

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).

e: lawrie.williams@sharpspixley.com