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LAWRIE WILLIAMS: Q3 SGE gold deliveries set to exceed phenomenal 800 t

The latest delivery figures from the Shanghai Gold Exchange (SGE) remain remarkably high with 65.7 tonnes withdrawn in week 38 (ended Sept  25th) making a massive total so far this year of 1,958.7 tonnes.  Deliveries in Q3 alone are only a shade under 800 tonnes to date – an absolutely phenomenal quarterly figure and this 800 tonne Q3 total will certainly be breached once the current (short) week’s figures are announced. If deliveries are maintained at this kind of rate our projected 2,650 tonne guesstimate for total SGE withdrawals this year could well be exceeded.

It will be interesting to see whether week 39 withdrawals will also bring the ytd total to over 2,000 tonnes, given that they will only cover 3 days trading out of the Exchange with it being closed yesterday and today (and for the first three days of next week too) for the National Day and Golden Week holidays when Chinese business shuts down. Thus we can expect total figures for weeks 39 and 40 to be well below recent levels, before picking up strongly again in week 41.

The Chinese holiday week is probably also accounting for the drift in the gold price to down below $1,110 with volumes faltering given the lack of Chinese demand which offers those Western traders who would like to see the gold price fall, the opportunity to take it lower without fear of Chinese buying bringing it back up again.  However, a disappointing U.S. jobs report can serve to fill the China gap - and it has with gold spiking today as the September jobs report came in well below expectations and July and August figures were revised downwards.  This is seen as a signal that the U.S. Fed may yet defer commencing interest rate rises further into the future.

 SGE Q3 withdrawal figures to date

SGE Withdrawal week ended

Physical gold withdrawn

July 3rd

44.3 tonnes

July 10th

61.8 tonnes

July 17th

69.2 tonnes

July 24th

73.3 tonnes

July 31st

53.3 tonnes

August 7th

56.1 tonnes

August 14th

65.3 tonnes

August 21st

73.0 tonnes

August 28th

59.9 tonnes

September 4th*

36.8 tonnes*

September 11th

73.7 tonnes

September 18th

63.2 tonnes

September 25th

65.7 tonnes

Total Q3 to date

795.6 tonnes

The 1,958.7 tonne figure for SGE withdrawals so far this year is a huge new record, just under 300 tonnes more than the 1661.6 tonnes recorded in the previous record 2013 year and an enormous 578 tonnes more than at the same time last year.   If anything indicates that Chinese gold demand so far this year is the highest ever, despite mainstream analysts’ suggestions to the contrary, this is it.

Another indicator that Chinese demand is running high has come from the publication of Swiss gold export figures for August – the largest, but not the only, conduit for physical gold flows to the East.  These show that exports to Hong Kong and mainland China between them came to 54.2 tonnes (with 38% of this going to mainland China directly and bypassing Hong Kong altogether – yet another demonstration that Hong Kong export figures to China are no longer a proxy for total Chinese demand as some news media still seems to think!).  Incidentally Swiss exports to India were even larger at 67 tonnes). These are all data on physical gold deliveries and demonstrate that gold demand in Asia remains extremely strong and will continue to drain Western inventories.  Where will it all end?

02 Oct 2015 | Categories: Gold

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