Live Gold Price

£ %
$ %
%
£ $

LAWRIE WILLIAMS: CHINA - SGE gold withdrawals still up 6% YTD

While Shanghai Gold Exchange gold withdrawals in October – always a difficult month because of the country’s Golden Week holiday right at its beginning when the SGE was closed – were marginally lower than a year earlier (by only 1.71 tonnes), year to end-October withdrawals are still over 6% higher than in 2016.  But they are 23.5% lower than the record 2015 levels (see table below). 2015 saw the main turnaround in what had been a declining gold price while the past two years have largely seen periods of gold price consolidation.

Table: SGE Monthly Gold Withdrawals (Tonnes)

Month

2017

2016

2015

% change 2016-2017

% change     2015-2017

January

184.41

225.08

255.42

- 18.1%

 -27.8%

February*

148.24

107.60

156.36

+37.8%

-5.2%

March

 192.25

183.24

213.35

 +4.9%

 -9.9%

April

 165.78

171.40

195.45

 -3.3%

 -15.2%

May

 138.08

147.28

162.15

 -6.2%

 -14.8%

June

 155.51

138.51

195.67

 +12.3%

-20.5%

July

 144.71

117.58

285.50

 +23.1%

 -49.3%

August

 161.41

144.44

265.27

 +11.7%

 -39.2%

September

 214.24

170.90

259.98

+25.4%

-17.6%

October

 151.54

 153.25

176.29

 -1.1%

 -14.0% 

November

 

 214.72

202.71

 

  

December

 

 196.37

228.21

 

    

Year to date

1656.17

1559.28

2165.44

+  6.2%

- 23.5%

Full Year

 

 1,970.37

2,596.37

 

 

Source: Shanghai Gold Exchange, Lawrieongold.com

The figures year to date suggest that SGE withdrawals this year could come out at over 2,000 tonnes again – indeed possibly as much as 2,100 tonnes, as against 1,970 tonnes last year.  Arguably, as we have often stated beforehand, we consider the level of SGE gold withdrawals as being a probably more accurate representation of the country’s true gold demand (calculated by known gold imports plus national production and scrap supply) than the far lower ‘consumption’ or ‘demand’ figures calculated by the world’s major precious metals consultancies.  The consultancies’ figures for consumption look likely to come out at a around 1,100 tonnes this year – probably a little higher than in 2016 - but they represent a restricted consumption sector and do not take into account gold imports for financial transactions and probably understate some other sectors too.  The latest figures – to end-September – from the China Gold Association which uses similar data to the consultancies, also shows this rising consumption trend compared with 2016 with particularly strong growth in gold bars for investment, but also something of a positive turnaround in gold jewellery consumption too.

The country may also be surreptitiously building its gold reserves.  It has reported a zero increase in these now for the past 11 months – See: CHINA – Still no official increase in gold reserves  and we assume this represents a return to the old system where the country moved newly purchased gold into accounts it felt no need to report to the IMF until it considered it expedient to do so.  With a plan to pay for at least some of its oil imports with the yuan, exchangeable into gold, rather than the petrodollar, it probably does need to increase its reserves to cover this potential gold bleed. (China is currently the world’s largest oil importer.)  As comfortably the world’s largest gold producer the country could accomplish such below the counter gold accumulation without any impact on global demand or price through direct purchases from the mining companies, bypassing the main exchanges.

With Indian gold demand also increasing this year compared with the hugely depressed figures recorded in 2016, overall Asian demand so far in 2017 is positive.  The World Gold Council also notes that German safe haven demand for gold is also running at extremely high levels and this may more than counter indifferent gold demand in the USA as shown by very poor U.S. Mint gold coin sales year to date.

While perhaps $1,400 gold this year is becoming less and less likely, the yellow metal’s price does seem to be firmly established in its current trading range, but is largely moving with the dollar index which has been seei ng something of a recovery after some heavy falls.  The dollar index is still down around 5% year to date, but has recovered around 2% from its lows over the past couple of weeks.

 

07 Nov 2017

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

EU Cookie Law

We have placed cookies on your computer to help make this website better. We use a Google Analytics script which sets cookies. More details can be found in our privacy policy.

Click here to agree to terms and view site   >>>