LAWRIE WILLIAMS: China gold consumption up 45% yoy
China’s Shanghai Gold Exchange (SGE) has issued its gold withdrawal figures for December and this show’s that this year’s Chinese gold demand is not only 45% higher than in 2020, but also 6.3% up on the 2019 total too. 2020 figures will have been quite severely affected by the Covid-19 pandemic, but 2019 will have preceded this – unless the virus outbreak in China was actually happening earlier than has previously been admitted..
We always assume that SGE gold withdrawal figures approximate to China’s actual demand total as it tends to match known import figures, plus China’s own production, plus an allowance for scrap conversion. The rising amount in 2021 is commensurate with China’s apparent recovery from the virus pandemic. With new infections running at exceptionally low levels compared with the West, due to draconian measures taken to keep any virus spread at an absolute minimum. This was highlighted recently by an imposed extreme lockdown on the cities of Xi’An and Yuzhou as a result of detected virus cases numbering only a tiny handful in the two cities. The severity of the imposed restrictions is highlighted by the lockdown in Yuzhou after only three new cases were detected.
The Chinese gold demand recovery, taken in conjunction with a big rise in Indian gold imports in 2021, bodes well for global gold demand totals in the current year Latest reports show that India imported 1,050 tonnes of gold last year, worth $55.7 billion – the most in over a decade. On these figures, China and India between them imported more gold than the global total of new mined production
Table: China SGE Monthly Gold Withdrawals 2019-2021 (Tonnes)
|
Month |
2021 |
2020 |
2019 |
% change 2020-2021 |
% change 2019-2021 |
|
January |
159.49 |
110.87 |
218.54 |
+43.9% |
-27.0% |
|
February* |
92.39 |
28.99 |
99.77 |
+643.6% |
-7.4% |
|
March |
167.74 |
82.27 |
218.03 |
+103.89% |
-23.07% |
|
April |
148.04 |
95.80 |
151.89 |
+54.53% |
-2.5% |
|
May |
105.06 |
69.18 |
123.11 |
+51.86% |
-14.66% |
|
June |
132.80 |
85.71 |
107.45 |
+54.94% |
+23.59% |
|
July |
110.61 |
82.94 |
129.33 |
+33.36% |
--14.47% |
|
August |
149.95 |
111.37 |
107.73 |
+34.64% |
+39.19% |
|
September |
190.87 |
153.98 |
117.08 |
+23.96% |
+63.03% |
|
October* |
136.62 |
94.28 |
91.15 |
+44.91% |
+49.88% |
|
November |
158.31 |
127.65 |
119.43 |
+24.02% |
+32.55% |
|
December |
193.44 |
162.30 |
158.50 |
+19.26% |
+22.04% |
|
Full year |
1,745.70 |
1,205.33 |
1,642.01 |
+44.83% |
+6.31% |
Source: Shanghai Gold Exchange, Sharps Pixley.
*Months incorporating Golden Week holidays when SGE closed for a week
** Cumulative totals as reported month by month by SGE for first ten months of the year.
The growth in cumulative Chinese and Indian demand figures for the full year compensate for the sum of gold withdfrawals from global gold ETFs so indicate that gold deamd, and the metal's fundamentals are almost certainly holding up well, which is one of the major positives for gold going forwards. There is also strong demand in North America and in some European and other Asian nations. Assuming this all holds up through the current year - indeed may increase if some major geopolitical tensins come further to the fore, alongside the negative economic effects resulting from the spread of the Omicron virus variant, and of possible variants yet to materialise, we would caution against new investment in general equities or bitcoin and suggest traditional safe havens like gold or silver might be appropriate.
08 Jan 2022 | Categories: Gold, Silver, China, Bitcoin, India
