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LAWRIE WILLIAMS: Big 40% uptick in November gold withdrawals on Shanghai Exchange

As we had predicted the monthly report from the Shanghai Gold Exchange (SGE) for gold withdrawals during November showed a sharp upwards move to 214.72 tonnes – a remarkable increase of some 40% over the October figure.  If this kind of level, or better, is maintained into December this gives us the realistic possibility that the full year total could still reach 2,000 tonnes – well down on last year’s record 2,596 tonnes, but would keep China in its position as being comfortably the world’s largest gold consumer.  See table below for month by month SGE gold withdrawal figures for the past three years.

Shanghai Gold Exchange Monthly Gold Withdrawals (Tonnes)

Month

2016

2015

2014

% change 2015-2016

% change 2014-2016

January

225.08

255.42

246.00

- 11.8%

 -8.5%

February*

107.60

156.36

171.67

- 31.2%

-37.3%

March

183.24

213.35

146.56

-14.1%

+25.0%

April

171.40

195.45

129.59

-12.3%

+32.2%

May

147.28

162.15

129.34

-9.2%

+13.8%

June

138.51

195.67

128.03

- 29.2%

+8.2%

July

117.58

285.50

137.53

- 58.8%

-14.4%

August

144.44

265.27

161.95

- 45.6%

-10.8%

September

170.90

259.98

202.43

 -34.3%

-15.6%

October

 153.25

176.29

201.11

 -13.1%

 -23.8%

November

 214.72

202.71

212.49

 +5.9%

 +1.0%

December

228.21

235.66

Year to end November

1,774.00

2,368.15

1,866.70

-25.1%

-5.0%

Full Year

2,596.37

2,102.36

Source: Shanghai Gold Exchange, Lawrieongold.com

The above figures also show, that for the first time this year the monthly total actually exceeded that for the same month a year ago, but this could be due to the fact that the 2017 Chinese New Year holiday starts 11 days earlier than the 2016 one which means gold traders and fabricators could be bringing their restocking ahead of the holiday forward by a few days.

As we have also noted there is considerable argument amongst gold analysts as to whether SGE withdrawal figures are an accurate representation of China’s true gold demand with the mainstream analysts coming up with far lower figures for Chinese gold consumption.  In part this is due to what is actually classified as consumption, but also the reluctance on the part of the analysts to accept that the SGE figures are indeed equivalent to Chinese gold demand coming up with various, and sometimes conflicting, reasons why they are not an accurate measure.  Other China followers, like bullionstar’s Koos Jansen, disagree and have published some impressive data supporting their case:  See: Gold, GFMS, China Demand – Koos speaks out.

As we have also pointed out, known Chinese gold import figures from countries which publish a full country-by-country breakdown of their own gold export statistics, plus China’s own gold production, would tend to suggest that the SGE figures are nearer the true total of Chinese gold flows than the mainstream analysts’ figures might appear to indicate.

Whatever the truth of the matter, the SGE withdrawal figures, and their comparisons with previous years, are very definitely an important measure of Chinese gold consumption trends and on this basis, although the year to date data show a 25% year on year fall compared with 2015 one should recall that Chinese gold demand in 2015 was a huge new record and even a 25% fall from this to an annual level of around 2,000 tonnes still represents a huge slice of global gold demand from a single nation – more than 60% of global new mined gold output.  It makes one wonder where other gold consuming nations are sourcing their gold and helps explain why SGE gold benchmark prices (the SGE deals in physical gold) hav e recently been consistently higher than COMEX and London prices which are largely based on paper gold transactions.

13 Dec 2016 | Categories: Gold

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