SGE IS publishing gold withdrawal figures – but only monthly

I am indebted to Koos Jansen (who else) of for initially guiding us in the right direction, and to LawrieOnGold reader John Bentin and his Chinese speaking wife for interpreting the tables, in that, contrary to our previous assumptions, the Shanghai Gold Exchange (SGE) is still publishing SGE gold withdrawal data – but now only on a monthly, rather than a weekly, basis.  Thus for January 2016, some 225.1 tonnes were withdrawn from the Exchange, compared with 255.4 tonnes in the first month of the record 2015 year when full year deliveries reached 2,596.4 tonnes.  The amount is close to the 228.2 tonnes recorded in December last year, and ahead of November 2015 deliveries of 202.7 tonnes.  In January 2013, the previous record year for SGE deliveries, only 173.7 tonnes were delivered out of the SGE.

Given there can be quite substantial month-to-month fluctuations in withdrawals it is far too early to tell how 2016 will measure up to last year, but the figures do show that gold demand as represented by SGE withdrawals remains at a strong level – 56.3 tonnes  a week on average.  However it remains to be seen how the surge in the gold price over the past few weeks will affect February deliveries (which are anyway likely to be substantially lower due to the week-long Chinese New Year celebrations next week during which the SGE will be closed.)  We will really need to wait until March and April to see how 2016 deliveries are measuring up to previous years.

Even so, the January figures are quite encouraging in showing that gold demand has indeed been holding up pretty well so far.  Overall China and India, where gold imports of over 100 tonnes were recorded in November, look like remaining the key gold market drivers.  We are also seeing a pick up in a third key market, the U.S. where there have been strong gold ETF inflows year to date, and very strong demand for gold coins from the U.S. Mint.  With the gold price up 9% year to date the yellow metal is currently outperforming any other asset class.

(But, be warned.  Gold started off strongly in January 2015 too, also rising by around 9% in the first three weeks of the year.  But from then it was almost all downhill.  This year’s upturn is looking perhaps stronger and longer, and does seem to have more going for it than a year ago, but the price is still largely set by the COMEX paper gold market in New York where huge amounts of virtual metal are traded on a daily basis and there may well be other forces at play here which seem to ignore fundamentals.  Could this yet be déjà vu all over again!!)

The Shanghai Gold Exchange deliveries dilemma

We were hoping for some clarification on the latest reporting of Shanghai Gold Exchange(SGE) gold deliveries in today’s SGE gold data report for week 2 given the seemingly massive figures being reported so far this year and this has not been forthcoming.  The announced figures so far this year are so far in advance of anything we have seen beforehand that the natural conclusion is that the goalposts have been moved and this year’s figures can not be compared with last year’s.

For example, the average weekly withdrawals figure from the exchange – the literal translation of the category headline as reported by the SGE is ‘deliveries’  – was around 50 tonnes in 2015.  So far this year the reports out of the SGE for weeks 1 and 2, using exactly the same heading in the released table – 本周交割量 – as for last year’s released tables of deliveries, have been 238.2 tonnes in week 1 and 247.2 tonnes in week 2 giving an apparent  total for the year to date of 485.5 tonnes.  (However there has presumably been a small unannounced adjustment for week 1 as the cumulative total (累计交割量 )  reported by the SGE with the week 2 figures was actually 491.2 tonnes.)  These are so much larger than last year’s figures that we are now pretty certain that although the descriptive headline in the tabulated announcement is exactly the same as for last year, the new figures relate to a different statistical make-up.

Koos Jansen, as always, writing on , has come up with an explanation for the huge differences between this year’s and last year’s statistics .  He draws our attention to an announcement by the SGE dated January 16th (in English) which states:

With a view to distributing market data regarding physical deliveries in a more comprehensively way and helping market participants interpret delivery-related data and reports more accurately, the Shanghai Gold Exchange (the “Exchange”) has adjusted some terms in the Delivery Reports which are included in Market Data Weekly Reports and Market Data Monthly Reports. The adjustments shall be effective as of Jan. 1st 2016 and are clarified as follows:

        1.The term “delivery amount” refers to the sum of the trading volume of physical products and the contract delivery volume of deferred products. The term “delivery ratio” refers to the proportion of delivery amount to the total trading volume of both physical and deferred contracts.

        2.The term “load-out volume” refers to the total volume of standard physical bullions withdrawn from SGE-certified vaults by members and customers.

        3.The terms “accumulative delivery amount”, “accumulative trading volume” and “accumulative load-out volume” respectively refer to the sum of delivery amount, trading volume and load-out volume from the beginning of the year to the statistical time point. The term “accumulative delivery ratio” refers to the proportion of accumulative delivery amount to the accumulative trading volume.

        4.Delivery-related data of silver products are added into the reports.

To an extent, this only serves to confuse.  According to Jansen – perhaps the foremost expert on things SGE – the old reported withdrawals figure to compare like-with-like would be the “load-out volumenoted as item 2. in the SGE announcement.  Unfortunately this is not one of the figures released by the SGE in its new weekly statistical presentations.

So, for the moment, all that we can glean from the SGE figures is that total volume through the Exchange remains very high and those for week 2 were a little higher than for week 1, but the amounts which relate to the old SGE withdrawals figure would seem to remain obscured within the new, supposedly improved, SGE data announcements.

For Koos Jansen’s full explanation of how he sees the latest SGE presentation of its statistics click on: Are SGE Withdrawals Gone?

CGA figures equate Chinese domestic gold demand to SGE withdrawals

My latest article on

It seems to take an awful long time for the publication to appear, but now the Chinese Gold Association (CGA) has published, in Chinese, its 2014 Gold Yearbook and its figures for China’s gold demand that year, and for China’s gold imports../../css/ious_metals_consultancies_such_as_GFMS__which_also_provided_data_to_the_World_Gold_Council_that_year_30vef4dq57xfpgqsdzugdk.css), Metals Focus (which is current data provider for the WGC), and CPM Group – the most prominent U.S. based precious metals consultancy.  The report on the latest CGA figures to be published came from who else but precious metals chart guru, Nick Laird of, who monitors China figures extremely closely, and who also published an image from the yearbook showing the actual table from the report

For 2014 for example, the WGC (whose figures seem to be taken as gospel by the world’s major media outlets) reported mainland Chinese gold consumption that year at 813.6 tonnes.  The CGA yearbook stated the total Chinese gold demand figure at 2,106 tonnes – which is actually extremely close to the Shanghai Gold Exchange (SGE) withdrawals figure for the same year at 2,102 tonnes.  (For 2013 CGA total demand figures were also almost identical to SGE withdrawal figures for that year.)   Now while the categorisation of what should actually be included in the WGC consumer demand figure may differ somewhat from what is included in the CGA total demand figure, the 2014 difference of 1,292 tonnes between the two sources stretches belief.  Either the WGC (using GFMS figures) got it hugely wrong, or the China Gold Association is including all kinds of things which the WGC isn’t in its calculations…….

To read the full article, which goes into more detail on Chinese gold data, click here

An answer to the hugely anomalous 2016 Week 1 SGE Gold Delivery figure.

Inability to read Chinese and to understand the nuances of a title change may well have caused us to publish a potentially misleading note about the latest SGE gold announcements and we are indebted to China follower Koos Jansen for an answer to the question posed in our most recent article: Latest SGE gold withdrawals figure so large it must be a typo. Mustn’t it?

Koos Jansen writing on 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 ‘Delivery 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?

To us the nuance of the category Delivery amount and the old Witdrawals was lost without Jansen’s explanation of the change in SGE reporting policy, which is set out in full in the article noted above.  If this SGE announcement pattern continues then we will no longer be able to compare the SGE’s gold withdrawals on a like for like basis any more.

UPDATE: Latest SGE gold withdrawals figure so large it must be a typo. Mustn’t it?

Editor’s note:  Following the receipt of clarifying information the implications of the article below may be a little misleading and premature.  However we are keeping the article on site so readers can understand how a misinterpretation of new SGE data in a different format came about.  Reading this note, plus a follow-up article – An answer to the hugely anomalous 2016 Week 1 SGE Gold Delivery figure  may clarify the situation with regard to the latest SGE reporting figures.

The Shanghai Gold Exchange (SGE) announces its weekly gold withdrawals figure on Fridays – reporting the withdrawals a week in arrears.  So this Friday it came up with the figures  for Week 1 2016 (from January 4-9).  it presented them in a new format and has also started to release weekly silver withdrawal figures which it had not been doing in the past.

So far so good, but the announced weekly gold  figure on the face of things on this occasion was SO HIGH, that some observers think it must have been a typo.  The announced figure was fully 238.2 tonnes – around twice the previous weekly record level set back in 2013, which was itself more than around two times the normal prevailing weekly level at the time, and has not been  neared since.  last year saw some abnormally high weekly SGE withdrawal figures, but this amount is three times higher than the highest weekly figure in 2015

So far there has not been a correction to the announced figure, but we will continue to monitor the SGE site in case it was a mistaken entry (See subsequent post for an explanation).  This may not arise until next Friday when the cumulative figure for the first two weeks will also be announced.

There is some further comment on this in an article I’ve posted on the Sharps Pixley site – click here to read

Chinese 2015 gold demand equates to around 80% of total global gold output

The latest gold withdrawals figure out of the Shanghai Gold Exchange of 52.83 tonnes for the trading week ended 25th December brings total withdrawals year to that date of 2,555 tonnes, with four trading days to go until the year end.  Given that this tends to be a strong time of gold demand in China in the runup to the Chinese New Year, which this year falls on February 8th, and if we assume similar delivery levels over the final few days of 2015, total gold withdrawals out of the SGE for the full year should end at between around 2,590 – 2,610 tonnes. While some analysts reckon that SGE withdrawal figures do not represent actual Chinese demand (mainly due to interpretations of what actually constitutes demand), others disagree.  And the Peoples Bank of China, in its own statistics, does indeed seem to equate SGE withdrawals with national consumption.

We were predicting a full year SGE withdrawals total of around 2,650 tonnes back in September.  See: Latest SGE gold deliveries suggest enormous 2015 total of over 2650 tonnes!  In the event the figure is not going to be quite this high as withdrawals from the Exchange have slowed a little over the final quarter of the year – although have still remained very strong, but not as high as the exceptional figures being reported in Q3.  Nevertheless, as we have been reporting all along, the full year total is going to be a massive new record – over 400 tonnes higher than in 2013, previously the highest year ever for SGE gold withdrawals.  This annual figure also equates to around 80% of global new mined gold output.

If Chinese demand holds up in 2016, along with central bank purchases – mostly by China and Russia – and Indian imports, we anticipate gold prices coming under pressure as the supply/demand balance looks like being in deficit given scrap sales and divestment out of the gold ETFs are both falling and new mined production will likely be flat, or perhaps beginning to decline.

It should be noted though that the decline in global new mined gold output has not so far materialised to the extent that many analysts had suggested, largely due to the gold price not falling nearly as much in many major producer currencies as it has in the US Dollar.  With mining costs mostly incurred in the local currency, but with the media fixated on the gold price fall in the US Dollar alone, gold mining economics are not quite as dismal as the media, and some analysts, would have us believe.  See the Table below for what has happened to the gold price in the top 10 major gold producer currencies over 2015.

Rank Country Gold output 2014 (tonnes) Gold Price change over year (%)
1. China 462.0 -7.4%
2. Australia 272.4 -0.8%
3. Russia 266.2 +10.5%
4. USA 210.8 -11..4%
5. Peru 171.0 +4.5%
6. South Africa 167.9 +18.5%
7. Canada 151.3 +5.5%
8. Mexico 110.4 +3.6%
9. Ghana 104.1 +4.5%
10. Brazil 90.5 +32.0%


With only two of the top 10 gold producing nations seeing any kind of significant gold price decline, and seven actually seeing a higher gold price in their own currencies over the full extent of the year, yet receiving their revenues in US Dollars, all is not quite as many analysts predicted.  While this might suggest that gold output will carry on rising instead of falling, this is not the case either as capital expansion programmes and new project developments have been severely curtailed through lack of availability of finance, while many older mines seeing reserves depleted, or ore grades falling, will still be closing down due to the aging process.  These are not going to see new projects or expansions coming on line to replace them.  Up until around now, new projects which were already well into the production pipeline had been adding more output thus replacing the aging assets which have had to close.  But these new projects and expansions are now mostly at full production levels so the downturn in global new mined output is now only just beginning.

All this suggests a supply squeeze ahead in physical gold.  This is already being seen in terms of declining gold inventories in the US and the UK – the sources for most of the gold currently flowing from West to East.  The other major source of stockpiled gold, the big gold ETFs, are also seeing slowing outflows. 2016 could see this all coming to a head with a strong positive impact on the gold price by the time this new year comes to an end.

SGE Rising: Another 51.75 tonnes withdrawn week 49

Happy Holidays

A quick Christmas Day post to keep China gold followers up to date.  SGE withdrawals for Week 49 (the week ended December 18th) were back on the upwards path as the Chinese New Year draws nearer.  51.747 tonnes of gold were withdrawn making foe a total so far this year of 2,502.6 tonnes – already around 322 tonnes more than the previous full year record of 2,181 tonnes achieved in 2013, and with the best part of two trading weeks still to go.  We thus stand by our estimate for the year of total withdrawals as ending the year in the high 2,500s – equivalent to around 80% of total global annual new  mined gold production.

If anything shows that Chinese gold demand is running high this year, despite the much more limited figures being put out by the major analytical consultancies which only appear to cover a proportion of total Chinese gold demand, then these latest figures demonstrate this strongly, if only in comparison with the previous SGE record withdrawal figures.

Scary 2016 ahead, Russia adds gold, SGE withdrawals etc. – and Season’s Greetings

Firstly my compliments of the season to all reader’s of, which I have now been publishing for almost exactly one year – and which has achieved just short of 100,000 page views over the period.  Thanks for following.

Here are some pointers to articles I have published on – one of the best aggregators of precious metals news and comment available – in the past few days:

Scary year ahead. Should we be buying gold and silver:  Portents for 2016, according to a number of well-respected observers – are beginning to look decidedly scary. Will this turn the investment sector back into buying gold and silver?

Russia adds another 21.8 t gold and 46t more drawn out of China’s SGEThe Russian central bank has been continuing its gold buying spree increasing its holdings by around 22 tonnes, while China’s SGE sees physical gold continuing to be withdrawn at a strong level

And one you may not have seen, published on pointing to the potential of an investment in the GDXJ if gold and silver do make something of a recovery in 2016: GDXJ- Limited Downside And Great Upside Potential In A Rising Gold And Silver Price Scenario


Update with chart: Gold taken out of China’s SGE to top previous record by huge 400 tonnes.

The following is an edited version of an article I’ve written for – and was posted on that site on Friday, entitled: CHINA: SGE Gold withdrawals head for huge new record year.  This year’s withdrawal figures passed the 2013 full year record a months ago already and at the current rate will exceed the previous record figure by around 400 tonnes by the year end – although there’s a chance the figure could be higher still as withdrawals tend to rise as we get closer to the Chinese New Year, which falls on February 8th in 2016.

The big growth in SGE withdrawals this year is demonstrated  by the chart below from Nick Laird’s website  which shows total withdrawals at the same time for the past seven years.  As can be seen gold taken out from the Shanghai exchange have been growing strongly year by year apart from a blip in 2014.    This year’s figure for week 47 is thus a massive 538 tonnes higher than at the same time last year and 382 tonnes higher than in the previous record 2013 year.  As can be seen from the chart the growth in withdrawals accelerated hugely in 2013 compared with previous years – a trend which has continued pretty well since.

sge 47

The Sharps Pixley article notes that although Shanghai Gold Exchange (SGE) weekly withdrawal figures seem to have fallen back a little from their heady July/August/September heights, when at times over 70 tonnes of physical gold were taken out of the Exchange’s vaults in a single week, this year’s total is still heading for a huge new record high.  Total withdrawals so far this year to the end of last week (Dec 4th – the SGE reports withdrawals a week in arrears) have amounted to just under 2,405 tonnes after a figure of 42.6 tonnes in the latest reported week.  The record full year withdrawals figure was back in 2013 when 2,181 tonnes were withdrawn – a figure which was already surpassed several weeks ago and with virtually four weeks of withdrawals still to come this year the full year total looks to be heading for the high 2,500s.  For reference the full year SGE withdrawals figure in 2014 had fallen back somewhat to 2,102 tonnes – still comfortably the second highest year on record at the time.

It was also noted that SGE withdrawal figures do remain running well in excess of known Chinese gold imports plus domestic production so far this year (See: 2016 a crunch year for physical gold supply).  The linked article suggests total gold availability of only around 2,100 tonnes for the full year (which includes a perhaps conservative estimate of around 200 tonnes from scrap sources).  However China is extremely reticent about reporting all its import and gold supply figures, so it is conceivable the actual figure could well be higher still perhaps bringing it closer to the SGE withdrawals metric.

But be that as it may, and given the huge discrepancy between the SGE figures and those for Chinese domestic gold consumption from the major analytical consultancies, if one just looks at comparative SGE figures they will provide a great guide to the trend in Chinese domestic gold flows and consumption so these gold flows have thus been trending sharply higher this year.  With the Chinese economy continuing to expand, even though at a much slower pace than in previous years, it would not be unreasonable to assume Chinese gold demand will continue to grow alongside the nation’s GDP.  It will thus be interesting to see what next year brings.

As readers will know, China is going through a centrally planned restructuring of its economy which is moving away from being export and manufacturing driven to being domestic consumer and services oriented following a pattern much of the Western World took generations to accomplish, yet China is aiming to do this in a few short years.  It is proving to be a painful process, but perhaps not so much for the Chinese themselves, but more for those who had been relying on ever-growing Chinese manufacturing growth as their primary market for raw materials to fuel manufacturing growth.  Looking ahead China, having built new cities and a remarkable infrastructure, is well placed to build on these plans which will continue to see the domestic purchasing power of its people grow as more and more services type better paying jobs are created.  Antiquated manufacturing plants are being closed down, particularly in the ongoing drive to reduce pollution which will perhaps put China at the forefront of new technological development, further enhancing its global position.

Another 46.6 t delivered from SGE. A massive 2165t withdrawn YTD

While the frenetic pace of the gold deliveries out of the Shanghai Gold Exchange has slowed a little following the Golden Week holiday last month, they are still continuing at a weekly rate which, if continued for the rest of the year, will bring total withdrawals for the full year to over 2,600 tonnes – a massive amount and comfortably in excess of the 2013 record of 2,181 tonnes. Indeed the 2013 total will almost certainly already have been exceeded this past week  – a full eight weeks before the year-end – with these figures to be announced next Friday.

We think that 2,600 tonne plus estimate above will actually be exceeded as, historically, Chinese demand tends to pick up again as the Chinese New Year – with  its associated gift giving – approaches as jewellers and other fabricators stock up to meet anticipated demand.

Latest gold export figures from Hong Kong to mainland China are also running strong with a net 97.242 tonnes delivered to the mainland by this route in September.  Hong Kong remains almost certainly the biggest conduit for Chinese mainland gold imports, but is no longer so dominant that flows via this route can be taken as a proxy for total Chinese demand – but certainly still remain a significant indicator. (See: August UK gold exports direct to mainland China dwarf Hong Kong)

Interestingly even the mainstream analysts, who seem to downplay Chinese demand figures, do seem to be coming round to the recognition that Chinese retail demand is again picking up.  We are pretty sure they will end the year confirming that China remains the world’s biggest gold consumer again thus beating demand from India, which itself also seems to have been picking up again this year.  Whether this will be adversely affected by Prime Minister Modi’s gold monetization schemes remains to be seen, but we suspect that any effect will be insignificant – at least initially.

Huge YTD 2015 Chinese SGE gold demand will pass full year record in 2 weeks

Full month figures for October aren’t yet available, but announced gold withdrawals out of the Shanghai Gold Exchange (SGE) up to October 23rd have already exceeded last year’s full year total – and last year was the second highest full year ever for SGE gold deliveries.  The record year of 2013 is now in the sights and will almost certainly be surpassed within the next two weeks.  As I have predicted before a full year total of around an absolutely massive 2,600 tonnes of gold  – over 400 tonnes higher than the previous annual record figure (and amounting to some 80% of total global new mined gold output) will pass through the SGE this year.  And this is all physical gold – not paper!



SGE gold withdrawals (tonnes)

2015 (to Oct 23rd)












Source: Shanghai Gold Exchange,

We have already concluded from published export statistics from countries supplying gold to the Chinese mainland that Chinese gold imports this year are almost certainly heading for perhaps 1300 tonnes plus – a very similar figure to that suggested by China gold specialist Koos Jansen writing on – and domestic production will probably be in the order of 480 tonnes for the full year.  Yet the principal mainstream analysts still see China’s consumption as perhaps only around 1,000 tonnes – and latest GFMS figures for Q2 even put China behind India as the world’s biggest gold consumer – although admittedly not by much.

However, the analysts seem to treat India and China totally differently in their assessments.  Indian gold consumption as they see it pretty much equates to the country’s gold import l  but chinese consumption is put far behind its new gold supply, which we calculate as imports plus domestic gold production, equating to some 1700-1800 tonnes.  add recycled gold into the mix and we are probably talking 2,000 tonnes or more – still well short of sge deliveries…..

To read full article on, click on this link

Chinese gold demand still running extremely high for Summer months

Contrary to some of the expressed media-disseminated information Chinese physical gold demand, as indicated by gold withdrawals from the Shanghai Gold Exchange (SGE), remains at a very high level indeed for the time of year.  The latest figure for withdrawals for the week ended August 7th was 56 tonnes, bringing the total for the year to date to a massive 1,520 tonnes.  This is a full 135 tonnes higher than the previous record for Chinese gold demand at the same time of year – back in 2013.

A particular feature of this year’s SGE withdrawal figures has been the continuing strength of demand so expressed through the Summer months when demand normally falls away.  This year weekly demand over the period has been mostly above the 50 tonne mark – indeed it was well over 70 tonnes just three weeks ago – and this is at a time of year when 30 tonnes plus normally represents a strong demand week on the SGE!  See chart below from

sge aug 15

If one checks out the weekly withdrawals bar chart (the lower section) one can see just how strong recent movement through the exchange has been in comparison with previous years.

Interestingly the Chinese Central Bank – the Peoples Bank of China (PBoC) – has also now started to report monthly updates in its gold reserves (see China gold reserves up 19 tonnes in July. Really?!) which could be seen as adding to overall Chinese demand, although many Western analysts are unconvinced about the accuracy of PBoC statements regarding the size of the nation’s real gold reserves.

The big question may well be has the recent devaluation of the yuan against the dollar, coupled with the admittedly fairly small gold price recovery to date, started to redress sentiment in the gold market in the West where prices are set.  There is news now of some of the big bullion banks taking deliveries of physical gold on their own account, and also of shortages of registered gold available for delivery in COMEX warehouses having to be ‘rescued’ from dangerously low levels by a major reclassification of a big hunk of gold from the Eligible to the Registered category by JP Morgan.  Is the tide turning at last?  This could presage a very interesting second half of the year in the gold markets of the world.


Update: 44% of June Swiss gold exports to China bypassed Hong Kong

The importance of Hong Kong as a channel for Chinese gold imports continues to diminish with nearly half of Swiss June gold exports going direct to the mainland.

As we have noted here before, there has been an increasing trend for China to import gold directly via its mainland ports of entry rather than via Hong Kong, which makes Hong Kong to China gold export data less and less relevant.  So headlines like the recent one from Bloomberg: China’s gold buying from HK drops to lowest in a year  and the accompanying ‘analysis’, which puts it all down to lack of mainland China demand, have to be seen in context and as potentially misleading.  Firstly June is normally a low month for gold trade in the area, but even so the sentiments expressed in the accompanying article seem to be countered by Shanghai Gold Exchange withdrawal figures.  These arerunning exceptionally high for the time of year with 69 tonnes withdrawn from the SGE in the latest week for which stats are available at a time of year when we might normally expect to see withdrawals of 20-30 tonnes – See: What to make of gold

One of the biggest exporters of gold to Hong Kong and China is Switzerland, and luckily we have official Swiss statistics to throw a little more light on this subject.  In June total Swiss gold exports totalled just under 100 tonnes with 32.3 tonnes going to China and Hong Kong combined. But of this total fully 43.6% went direct to the Chinese mainland, bypassing Hong Kong altogether which makes the Hong Kong export figures to China less and less indicative of overall Chinese gold imports.  Indeed for the whole of 2014 around 37% of Swiss gold exports to China and Hong Kong – which together amounted to 600.3 tonnes – went directly to the Chinese mainland without first landing in Hong Kong.  It is perhaps fair to assume that gold exports to mainland China from other nations is also seeing an increase.

Here’s the chart showing the major country-by country breakdown of Swiss gold exports for June: (apologies – the chart somehow didn’t appear when article first posted)


As can be seen from the above chart, India, Hong Kong and China between them accounted for 54% of total Swiss gold exports, and if one adds in other south Asian and east Asian nations the area accounted for around 65% of all Swiss gold exports that month.

Huge latest week SGE gold withdrawal figure – 62 tonnes

While the upwards restating on Friday of China’s gold reserve position at a much lower level than the market had been anticipating may have disappointed gold investors (China ups gold reserves at last – gold bulls disappointed and China shocks bullion market with small gold reserve increase), the latest reported volume of gold withdrawals from the Shanghai Gold Exchange (SGE) should provide counter encouragement.

We keep on reading in the mainstream media that Chinese (and Indian) gold demand is weak at the moment but this, in China at least, would seem to be belied by the recent levels of SGE gold withdrawals at what is usually a very weak time of year.  And the latest figure out of the SGE for the week ended July 10th seems to have been truly exceptional for summer trading.  The figure was a fraction under 62 tonnes – the eight largest weekly total ever – at a time of year when SGE withdrawals are usually at the 20-30 tonne level – bringing the total for the year to date to 1,191 tonnes.  As I wrote in a recent article on Mineweb (China on track for new annual record gold deliveries), if the momentum keeps up into the usually stronger late third and fourth quarters, Chinese gold demand, as represented by SGE withdrawals, is heading for a comfortable new record exceeding the 2,186 tonnes of 2013.

It should be recognised here though that with China not everything is always as it seems on surface.  SGE withdrawal figures nowadays are muddied by the inclusion of withdrawals out of the Exchange’s International section – the SGEI – but these are not reported separately, but just in the cumulative total.  SGEI withdrawals do not necessarily have to be landed in China and while they are thought to have been small so far there’s always the possibility that these have been taking off thus compromising the domestic ones.  Also, as we have pointed out before western mainstream analysts dismiss the SGE withdrawal figures as not being a measure of true retail demand.  (This is partly a matter of what they see as included in demand or consumption which ignores some categories – particularly gold used in financial transactions and as collateral – as well as suggesting there could be a degree of double counting in the SGE statistics (although SGE rules should preclude this).

But as an indicator of Chinese sentiment towards gold, and of gold flows into and within what is still comfortably the world’s largest consumer, SGE withdrawal figures still have to provide the pre-eminent data.

Gold investors should remember too though, that in the previous record year for Chinese gold demand, 2013, the gold price plunged throughout the year with the huge gold flows from West to East seemingly being totally ignored by the markets which set the gold price in New York and London.  Prices are set as much – far more in fact – by sometimes dubious dealings on the futures markets than by supply/demand fundamentals.  Ultimately, gold pricing, along with most of the world’s available gold bullion, will move to the East but this may still be some time away, but with the probable launch of a Shanghai gold benchmark price setting system later this year, this would seem to be getting ever closer.

Hong Kong to China gold trade and demand – the facts

This article was originally offered to Mineweb, but Mineweb has now asked me to cut back on gold and silver related commentary-type articles as not fitting in with the direction on which they want to take the site.  Consequently it has now already been published on  and as yet where my future precious metals commentary articles will be published, apart from here on, remains undecided.

Lawrie Williams

A great chart showing the big anomaly between Hong Kong gold exports to mainland China and SGE gold withdrawals raises further questions on media coverage on the significance of Hong Kong to China gold export figures.

We have mentioned before the considerable emphasis the global mainstream media has placed on Hong Kong gold exports to China as being indicative of the level of overall Chinese gold demand, while we have long averred that this is no longer the case with a large proportion of imported gold now going directly to China’s Shanghai Gold Exchange (SGE) through which it must pass, being delivered to other Chinese ports of entry.  We have been assuming that around 40% or more of Chinese gold imports have been coming in directly rather than via Hong Kong which means that Hong Kong can no longer be considered a proxy for overall Chinese gold imports.

But looking at the latest chart from Nick Lynn’s website, published below, it appears we have maybe significantly underestimating the true level of gold imports directly into mainland China and bypassing Hong Kong altogether – at least calculated in terms of deliveries via Hong Kong and actual SGE gold withdrawals:


Chart courtesy of and

As can be seen from the chart, for a considerable period now, SGE gold withdrawals have exceeded gold imports via Hong Kong by a very substantial amount – an amount which has fallen off dramatically since China loosened its import restrictions on gold coming in directly to mainland China ports of entry.  However it should be recognised that a significant part of the difference (just under 40 tonnes a month relates to gold production from China itself, which also passes through the SGE) but even taking this into account it definitely looks as though the proportion of gold coming in directly to the Chinese mainland continues to rise despite fluctuations in the amounts coming in via Hong Kong.  On the latest available figures, if we take the difference between imports from Hong Kong and SGE withdrawals, there is a shortfall of 123 tonnes.  If we subtract 40 tonnes of Chinese production from this, the discrepancy is still 83 tonnes suggesting 47% of the gold withdrawn from the SGE is coming in to China directly.

The Sharelynx chart also shows that so far this year this kind of percentage difference between Hong Kong gold exports to China and SGE withdrawals has been fairly consistent at the 40% or above level.

Now there is wriggle room in these statistical comparisons.  Chinese gold production tends to be lower at the beginning of the year than later on so the differences may well be even larger in Q1 and Q2 – while there may well additional stockpiled gold available within the SGE which  enables it to fill the currently high-for-the-time-of-year withdrawals even when inward gold flows may be lower than actual demand.  Nevertheless the figures are yet a further strong indicator that Hong Kong gold exports to the mainland are no longer a proxy for overall Chinese gold consumption.

Concerning the impact on the overall gold price, and thus on gold and gold stock investment, while total levels of Chinese imports in terms of physical gold flows from West to East should perhaps have an impact on the gold price, it is patently obvious that this can only be happening to a very limited extent, if at all.  Gold prices are still being set in New York and London regardless of the overall level of Eastern demand – See: Gold: The US sets the price but Asia does the buying.  This anomaly can only continue for so long (but this remains an indeterminate timescale), but with continuing Chinese moves to take part in the gold price setting process, the day when gold price control shifts to the East has to be drawing closer.  But whether Asian gold price control will be any more benign for the gold and gold stock investor remains to be seen!

SGE gold withdrawals: Western analysts misstate the position – Jansen

There  is some dispute between Koos Jansen, probably the pre-eminent analyst of Chinese gold matters, andwho writes for – the copyright holder for the article which follows and the mainstream Western analysts such as GFMS, Metals Focus, CPM Group and Precious Metals Insights as to what should actually constitute true Chinese gold demand.  Jansen is adamant in his opinion that SGE gold withdrawals are the true indicator, while the western analysts moostly come up with their figures which may differ by 1,000 tonnes or more as to what constitutes Chinese demand.  Here Jansen comments on a recent statement by Philip Klapwijk – as quoted by myself in an article for Mineweb – that some of the difference in the figures could be accounted for by re-exports of Chinese gold (mostly illegally) to Hong Kong for remelting which he put at over 1,000 tonnes last year.  Jansen sees this as an irrelevance in the true Chinese demand figure and feels the western analysts come up with spurious arguments to account for the huge differences.  Jansen’s article on this follows:

Western Consultancy Firms Continue Making Up False Arguments In An Attempt To Debunk SGE Withdrawals

More false arguments – that should explain the difference between Shanghai Gold Exchange (SGE) withdrawals and Chinese gold demand as disclosed by the World Gold Council – are being spread in the gold space. The most recent argument is gold export from China. 

Since 2013 I’ve been writing the World Gold Council (WGC) is grossly understating Chinese gold demand. The aggregated difference between SGE withdrawals and WGC demand from 2007 until 2014 is 3,354 tonnes. Though many arguments have been tested the Western consultancy firms have not been able to elucidate the difference – illustrated by the fact many new arguments keep appearing.

Please make sure you’ve read The Mechanics Of The Chinese Gold Market.

Chinese Gold Export Has Got Nothing To Do With SGE Withdrawals

Against all odds, the ‘export’ argument was presented by Phillip Klapwijk, former Executive Chairman of GFMS, currently Managing Director of Precious Metals Insights Limited (PMI), at the Bloomberg Intelligence Forum in London May 22, 2015, where Klapwijk talked specifically about the ‘supply surplus’ (the difference) in the Chinese gold market. I wouldn’t be writing this post if I would agree with Klapwijk. (PMI is nowadays the main data provider for WGC demand figures.)

In a previous post I’ve expanded on Chinese gold trade rules (click this link to read a detailed analysis). All we have to do now is refresh our memory and have a look at what Klapwijk said in London. There is no transcript of his speech, but Lawrie Williams from has written an article  about Klapwijk’s argument regarding gold export, I assume Williams has reported accurately or Klapwijk wouldn’t have tweeted a link to the article.

The slides from the presentation can be found on the PMI website.

Klapwijk’s argument: gold is exported from China mainland, which explains the difference between SGE withdrawals and WGC demand.

Williams wrote:

Chinese do export gold – to Hong Kong

…Indeed he [Klapwijk] asserts that this [gold export] has been happening in sufficient quantity to cover virtually all the imbalance between SGE figures and those of the Western analysts over the past two years.

I have a few reasons to believe this is not true:

1) Chinese gold export has got nothing to do with SGE withdrawals as gold is only allowed to be exported from Free Trade Zones, which are separated from the Chinese domestic gold market (the SGE system). It’s prohibited by the PBOC to export gold from the Chinese domestic gold market. 

Gold export from China to Hong Kong is nothing new, in contrast to Williams’ headline. Since I’ve been publishing data and charts on gold trade between Hong Kong and China I’ve always included gross import and export.

Hong Kong - CN monthly gold trade January 2009 - March 2015

Not only are these figures well known, it’s also well known gross gold trade between Hong Kong and China has got nothing to do with the Chinese domestic gold market and the SGE system. Gold can only flow in and out of the mainland through processing trade in Free Trade Zones, such as Shenzhen right across the border with Hong Kong. What is net importe into the mainland is done through general trade; this gold is required to be sold first through the SGE. The PBOC does not allow gold to be exported from the Chinese domestic gold market.

Gold that is exported from China is always processing trade from FTZs, it’s not gold from the SGE and therefor can’t have anything to do with the difference we’re after.

Screen Shot 2015-06-12 at 6.53.39 PM
Slide 1 by Klapwijk.
Screen Shot 2015-06-12 at 6.54.11 PM
Slide 2 by Klapwijk. Total supply is compounded by gross import, mine output and scrap supply. 

It’s pointless to measure total Chinese gold supply by Chinese gross import like Klapwijk does. Gross import has got nothing to do with the Chinese domestic gold market and Chinese gold demand.

Additionally, Round tripping inflates gross gold trade. Round tripping is always done through processing trade; speculators import and export gold from FTZs (usually between Hong Kong and Shenzhen). Because gold used in round tripping can make more than one round – the same batch of gold is imported and exported over and over again – Hong Kong/China gross trade data captures far more gold than is used for genuine processing trade (jewelry fabrication). For example, if 50 tonnes are round tripped 6 times, gross import and export are inflated by 300 tonnes, though nothing has been net imported into the Chinese domestic gold market.

China net imported 1,540 tonnes in 2013. The exact number for 2014 has not yet been published, my estimate is 1,250 tonnes.

2) Gold is smuggled from Hong Kong to China, not the other way around as Klapwijk states. From Williams’ article we can read:

…the China/Hong Kong border has been pretty porous, with very big movements of gold bullion, much in the form of very low mark-up jewellery and artefacts, from Mainland China into Hong Kong.

The low mark-up artefacts are just round trip products in my opinion. They certainly are not smuggled SGE bars.

Let me describe an example of how gold between Hong Kong and the mainland flows: gold bullion is exported from Hong Kong to Shenzhen, then the bullion is manufactured into jewelry and exported back to Hong Kong where thousands of jewelry shops are located (genuine processing trade). In Hong Kong consumer prices for jewelry are significantly lower than in the mainland because of tax rules, as we can see in the next slide from Chow Sang Sang Jewelry.

Screen Shot 2015-06-12 at 7.42.12 PM
Slide 3 by Chow Sang Sang.

As a result, many mainland tourists visit Hong Kong to load up on jewelry and return home. It’s common knowledge mainland tourist can walk across the border without having to declare gold jewelry. Chinese customs at the airport is very stringent on the export side, not on the import side (into the mainland).

Screen Shot 2015-06-12 at 7.45.42 PM
Slide 4 by Chow Sang Sang. Mainland tourists buy roughly half of Chow Sang Sang’s gold products in Hong Kong. 

So, bullion flows from Hong Kong to the mainland, then back to Hong Kong as jewelry and then it’s ‘smuggled’ into the mainland by tourists. No doubt gold is also smuggled from China to abroad, but I have no data on this.

3) Klapwijk greatly overstates Chinese gold export numbers. Let us turn to another slide compiled by Klapwijk.

Screen Shot 2015-06-12 at 8.00.26 PM
Slide 5 by Klapwijk. The data is based on Hong Kong Trade statistics.

Although it has got nothing to do with SGE withdrawals, in the slide above it’s shown China exports 1,000 fine tonnes every year based on Hong Kong customs data. Needless to say, I fully disagree; let’s do some number crunching. If I check the numbers on bullion, jewelry and articles from the Hong Kong Census and Statistics Department in 2013 I get totally different results (source import data, source export data). The next chart is based on my calculations and estimates from looking at Klapwijk’s previous chart.

Jansen’s data is based on the assumption all jewelry imported is pure gold (no gems) and the value excludes fabrication costs.

Quite some discrepancies. For the amount ‘gold bullion’ traded have a look at a screenshot from the Hong Kong Census report below. It’s disclosed Hong kong imported 337 tonnes of bullion from China in 2013 – the disclosed value matches this tonnage. I don’t see how Klapwijk can come up with 250 tonnes.

Screen Shot 2015-06-12 at 9.40.54 PM
The value is in ‘000 HKD.

Moving on to jewelry. After scanning the customs reports there was only one item I could find that can be used: “ARTICLES OF JEWELLERY AND PARTS THEREOF, OF PRECIOUS METALS OR METALS CLAD WITH PRECIOUS METALS (G)”, code 89731. Below you can see a screenshot.

Screen Shot 2015-06-12 at 10.03.39 PM
The value is in ‘000 HKD.

Because the weight is in GRAMS, not in KILOGRAMS as is ‘gold bullion’, the total tonnage is 209 metric tonnes. The total value is 39 billion Hong Kong dollars (HKD). The description of this category tells us the jewelries are made of ‘precious metals’, which can be gold, silver or platinum, it’s impossible to know exactly how much gold content is in the jewelry. Additionally, the total value includes gems and fabrication costs. If we deny silver, platinum, gems and fabrication costs and compute the total value to fine gold tonnes, the outcome is 104 tonnes (at a USDHKD exchange rate of 7.75 and a gold price of 1,500 USD). I don’t see how Klapwijk can come up with 450 tonnes.

Same story for articles, I get 1 tonne in contrast to his 300 tonnes. If someone can tell me what categories in the Hong Kong customs reports do capture a few hundred tonnes of fine gold I would be happy to change my numbers. Until then, China does not export 1,000 tonnes of gold to Hong Kong every year.

If the argument is, gold is smuggled out of China and doesn’t appear in Hong Kong trade statistics, that’s another story. In 2014 gold was trading at a small discount on the SGE relative to international prices for substantial periods, this could have triggered smuggling. But, in this scenario SGE bars (bullion) would have crossed the border with Hong Kong, notlow mark-up jewelry and artefacts. 

Koos Jansen
E-mail Koos Jansen on: [email protected]