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UPDATE: Announced figure for week 1 SGE gold withdrawals truly phenomenal. Is it a typo.

If the latest figures to come out of the Shanghai Gold Exchange are not a misprint or typo, then the amount of gold withdrawn in the first week of the year (Jan 4-9) may have been almost unbelievably high and is around two times the previous weekly record achieved back in April 2013.  The figure announced by the exchange for the week was thus an absolutely enormous 238.2 tonnes.  This compares with an average weekly withdrawal figure last year (a record year) of only around 51 tonnes, and is around three times the highest withdrawals week in the past year..

This seemingly anomalous figure coincides with the SGE changing the format of its weekly withdrawals announcement and was so large that Sharelynx.com chart guru Nick Laird (who is usually one of the first to report the SGE weekly figures internationally) has decided so far not to add the latest announced figure into his charts (showing the comparative figures for weekly, monthly and annual withdrawals going back several yearS) until he receives confirmation – perhaps not until the publication of next week’s figures which will also include the cumulative figure for the year to date.

Under the new reporting format, the SGE is now also announcing weekly silver withdrawals and those for week 1 came to 37.2 tonnes – a seemingly more reasonable number.

The SGE would have had the chance to correct the figure by now if it was a mistake, and it has not done so, but we will keep monitoring the site to see if there is any subsequent revision of the Week 1 figure and report accordingly.

But, if the reported figure proves to be correct then this represents an enormous acceleration in Chinese demand ahead of this year’s Chinese New Year, which falls on February 8th.  Gold demand as represented by SGE withdrawals was indeed a little muted in the final weeks of 2015 compared with the big levels of July, August and September that year so this could be a case of catch-up – but even if so the amount announced would be truly phenomenal and begs the question of where on earth such a volume of gold bullion could be coming from.  This is not paper gold, but physical metal!

So, so far perhaps more questions than answers.  Could the figure be a typo? Hopefully we will know by at least next Friday when the week 2 figures for gold and silver are announced.  But if not a typo then any continuation should be a game-changer for gold.

As always, China gold follower Koos Jansen writing on bullionstar.com has come up with an answer to this anomaly.  According to Koos, in restructuring its reporting, the SGE is actually reporting a different figure than its old straight withdrawals total - but is now reporting what it describes as 'Delvery Amount' instead.  He notes that this is described as: the sum of the trading volume of physical products and the contract delivery volume of deferred products. This is a rather different figure - much larger - than the old withdrawals amount.  To read Jansen's explanation, and what it means, click on 'Are SGE Withdrawals Gone?

 

17 Jan 2016 | Categories: Gold

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