Is Asian gold demand really low – or at an all-time high?

There remains a vast divergence between gold demand figures as estimated by mainstream gold analysts and apparent physical global gold flows.

‘There are three kinds of lies.  Lies, damn lies and statistics’ to quote Mark Twain supposedly himself quoting Benjamin Disraeli!  Is gold demand down as the statistics in the latest Gold Demand Trends report from the World Gold Council (WGC) would seem to suggest – or is it actually at an all-time high as some other equally persuasive statistics would have us believe?

A couple of days ago I received the following emails from precious metals charts guru, Nick Laird of, perhaps the closest follower of gold statistics anywhere in the world and one of those who firmly believes from the figures he receives that Asian gold demand is running extremely high.  Indeed running at record levels.

Nick commented thus

“I got an email from John Hathaway today saying “why is the WGC saying low demand when my charts are showing otherwise?”  Gold demand has never been higher than the last 9 months – ever.”

 “Seems to me that the WGC are not doing their job.!!!  Why are they not promoting gold but rather hiding how strong demand is???  One must ponder this question?”

Part of the problem here is that the WGC report is quoting ‘consumption’ in China and India and elsewhere and it is what actually comprises ‘consumption’ as assessed that is hugely open to interpretation.  Jewellery consumption is the key part of this and this is what has been treated as the most important element therein – and perhaps this has indeed dropped, although the difficulties of assessing this most significant consumer element should not be understated.

But in terms of actual gold flows in India and China alone the statistics do indeed seem to bear out Nick Laird’s very strongly held conviction.  As we have stated here before Shanghai Gold Exchange (SGE) withdrawals, even if not a totally accurate definitive figure for Chinese gold demand have to be a hugely indicative guide for the overall trend, and SGE gold withdrawals are indeed running at an all-time high, with volumes through the usually weak Summer  months coming in well above previous levels.  So far this year there have now been 13 weeks where SGE withdrawals have exceeded 50 tonnes – (the latest figure is 56 tonnes for the first week in August) – whereas in the previous record 2013 year there were only six such weeks.  So far this year, SGE gold withdrawals have totalled 1,520 tonnes.  In the record 2013 year at the same time they were 1385 tonnes.  The figures speak for themselves.

The world’s other top gold consumer, India, has also seen a massive pick-up in imports again this year (398 tonnes by the end of May) and with the peak annual demand season still ahead of us could again exceed 1,000 tonnes for the full year for the first time since 2011. Indeed a report last week suggested Indian gold imports had shot up in July, usually a weak month there too, to a value of $2.96 billion which equates to over 80 tonnes at recent gold prices.   Given India produces very little gold itself, the gold import figures pretty much equate to national consumption.  In fact they may understate it given that there is still a fair amount of gold being smuggled into the country to try and avoid the high precious metals import duties.

Add into this anecdotal evidence of very strong physical gold demand in many parts of the world as the gold price has fallen, together with continuing central bank gold purchases and we find ourselves falling into the Nick Laird camp of those believing that global gold demand is probably at a far higher level than the WGC half year statistics might suggest, although as noted above the latter’s consumption figures primarily relate only to an admittedly significant element of what might be considered overall global demand.  The WGC also did say it was expecting stronger demand in the second half, but it’s hard to get away from the huge divergence between the demand figures as set out by the mainstream precious metals analysts and the announced figures from the SGE and those gold import/export statistics from those who report them like India, Hong Kong, Switzerland and the USA,

2 thoughts on “Is Asian gold demand really low – or at an all-time high?

  1. Roacheforque August 19, 2015 / 11:04 am

    One might ask, “Can demand be interpreted, when supply is restricted”? Demand could indeed be unprecedented, but if supply is tight, and flow is rerstricted, how can demand be measured by the flow?


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