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LAWRIE WILLIAMS: China gold demand still building but silver less certain

While Chinese gold demand in April – as suggested by Shanghai Gold Exchange {SGE) gold withdrawal levels - may not have taken off to the extent some commentators have been reporting, it is still comfortably ahead of the level disclosed in the same month of 2020.  Altogether gold withdrawals from the SGE for the first four months of 2021 is over 78% higher than that recorded for the same four month period of 2020.  So far this year SGE gold withdrawals have been higher each month than in 2020, but have yet to catch up with 2019 monthly figures – or for almost any individual month since about 2014  They are getting close to 2019’s pre-pandemic withdrawal levels though and there’s a good chance they will overtake these in the months ahead when 2019 withdrawals weakened substantially.

China comfortably remains the world’s largest gold producer – well ahead of Australia and Russia in second and third places, both of which may be closing the gap with Chinese output showing year-on-year falls, while Australian and Russian gold output increasing, albeit slowly.  If either of these two countries is to challenge China for the No.1 spot that will probably not come about until around the end of the decade, if then. U.S. and Canadian gold ouput both seem to be on the rise too, offsetting falls elsewhere, but they are still well behind production from the top three.

The latest SGE gold withdrawal figures are set out in the table below: 

Table: China SGE Monthly Gold Withdrawals 2019-2021 (Tonnes)





% change 2020-2021

% change 2019-2021























































Full year






 Source:  Shanghai Gold Exchange, Sharps Pixley.

*Months incorporating Golden Week holidays when SGE closed for a week

** Cumulative totals as reported by SGE for first four months of the year

There does seem to be something of a sea change in overall gold demand statistics in particular.  The heavy level of withdrawals we had been seeing out of the big gold ETFs seems to have come to an end, and may even be reversing.  This, coupled with seemingly rising demand out of China and India bodes well for the supply/demand balance through the remainder of the year, thus the next quarterly Gold Demand Trends report out of the World Gold Council, with data assessed by independent precious metals consultancy, Metals Focus, should be particularly interesting in this respect.  However this is not due out for another three months, so our eyes will be glued to other gold supply and demand data in the meantime.

The outlook for silver is perhaps rather less certain, though.  The metal price historically has tended to follow that of gold – usually in a more exaggerated manner.  But we are still seeing some big withdrawals from the silver-based ETF sector which has to be affecting the overall supply situation.  Even though Keith Neumeyer claimed in a recent Kitco interview that silver supply is less adequate than the Silver Institute, among others, sees the current pattern, it should also be recognised that as CEO of silver miner, First Majestic, he is hardly a disinterested observer.  He is predicting a new silver price all-time high in the near future.  We see this as unlikely.

12 May 2021

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