Chinese gold consumption: Far higher than most analysts and media tell us

Edited version of article which first appeared on on Feb 15th

Once again we are indebted to Koos Jansen for crunching the numbers on China’s gold imports in 2016.  He has added together direct imports to mainland China from the following nations/areas which publish detailed export statistics – namely Hong Kong (771 tonnes), Switzerland (442 tonnes), Australia (53 tonnes up until September – October to December figures not yet available) and the UK (only 15 tonnes, although most UK gold exports to China now seem to be being routed via Switzerland where the refiners take good delivery gold bars from the UK and re-refine them to the sizes and purities demanded in the East).  Jansen sees little more going directly into mainland China from other sources and allowing for around 20 tonnes going in from Australia for the final quarter of the year comes up with a grand total of Chinese gold imports at approximately 1,300 tonnes. (See: CHINA Net Imported 1,300t Of Gold In 2016)

In addition – the USA will have exported around 4.5 tonnes direct to the Chinese mainland, and Jansen also comments that South Africa doesn’t break down its gold export figures so he may well suspect that some is going in from there too – but the amounts will be relatively small so we can stick to 1,300 tonnes as a nice round figure.

Add to that China’s own gold output, estimated by Jansen at 453 tonnes and there will also have been a scrap gold element to be taken into account.  This suggests that China ‘consumed’ around 2,000 tonnes of gold in 2016, which equates quite closely to the Shanghai Gold Exchange (SGE) gold withdrawals figure for the year of 1,970 tonnes – (See: 2016 SGE gold withdrawals lowest for four years).  This would seem to confirm Jansen’s oft-made assertion that SGE gold withdrawals are equivalent to total Chinese gold demand – a premise largely dismissed (perhaps without any adequate reason) by the major gold consultancies which virtually all put Chinese demand at less than 1,000 tonnes.

In part, this discrepancy relates to what the major consultancies label as ‘demand’.  They tend to ignore what Jansen labels as institutional demand which he puts at at least 778 tonnes plus, depending on the amount of supply from scrap sources.

In terms of Chinese gold flows though, all the above figures ignore Chinese central bank demand.  While this, at least in terms of reported additions to its gold reserves, appears to have slipped in 2016, it still came to a little over 80 tonnes – so overall gold flows for China last year look to have been in excess of the 2,000 tonnes noted above, although not by much.  This equates to 60% plus of the total of global new mined gold in 2016.

One other point from the latest statistics is the continuing reduction of the proportion of gold flows into the Chinese mainland via Hong Kong.  Too often we still see media headlines suggesting Chinese gold demand has risen, or fallen, purely based on the stats coming out of Hong Kong.  Based on the gold import figures alone, Hong Kong now accounts for less than 60% of the gold going into mainland China.  Thus the Hong Kong figures can no longer be considered a proxy for total Chinese gold imports.  As Jansen points out in his article:

Most likely Hong Kong’s position as the largest gold exporter to China will slowly fade in the coming years, as the State Council is stimulating gold freight to go directly to Chinese cities (hoping the Shanghai International Gold Exchange will eventually overtake Hong Kong’s role as the primary gold hub in the region). Consequently, gold exports to China are increasingly bypassing Hong Kong.  In December 2016 we got a preview of what is about to come: Switzerland net exported an astonishing 158 tonnes directly to China, up 418 % from November 2016, up 168 % from December 2015, and 106 tonnes more than Hong Kong did.”

See our own take on the Swiss December figures: China 154, Hong Kong 39.  Swiss Dec gold exports show remarkable gold flows.  We have long been pointing out the decline in importance of exports from Hong Kong to the mainland in the overall Chinese gold import figures.  Perhaps our message will eventually get through to much of the mainstream media – and some ‘expert’ commentators and analysts – who continue to ignore this point and continue with headlines which appear to collate Chinese total gold imports with those coming in from its Special Administrative Region!

Gold flows to China via Switzerland soar in December

The latest gold import and export figures into and out of Switzerland both showed huge increases in December with exports to China a particularly notable 158 tonnes compared with a rather small 30.6 tonnes in the previous month.  With gold flows into the Chinese mainland from Hong Kong also picking up in December this represents pre-Chinese New Year holiday demand and may also have been boosted by the lower gold prices prevailing in the final quarter of 2016.

Switzerland has always been a major conduit for gold flowing into stronger Eastern hands.  That into China for example stays there and doesn’t come out again.  The private Swiss gold refineries, Valcambi, Metalor, Pamp and Hereaus all specialise in re-refining gold scrap and 400 ounce good delivery gold bars into the smaller, mostly kilobar, sizes in demand in the Middle and Far East.

But most significant in the latest figures were the exports recorded to China of 158 tonnes – and given that China imports gold directly from a number of other sources too – this suggest a huge pick-up in Chinese demand at the end of a particularly weak year.  We have already pointed to a sharp fall in Shanghai Gold Exchange (SGE) gold withdrawals over the year (See:  2016 SGE gold withdrawals lowest for four years) which is symptomatic of the same overall reduction in gold demand in China over the full year, but whether the big rise in December imports from Switzerland is purely due to demand ahead of the Chinese New Year, or is gold price-related following the dip in US dollar bullion prices immediately following the US Independence Day holiday in July, is uncertain – but probably a combination of both.


The above graphic from demonstrates the huge increase in Chinese gold imports from Switzerland in December.

Greater Chance of Rate Cut Boosts Gold’s Appeal – The Holmes Gold SWOT

By Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors


  • The best performing precious metal for the week was silver.  Silver trades at a much more volatile spread than gold, thus its over 10-percent price reaction this week, its biggest weekly gain in 15 months (due to the fallout in Europe over Britain voting to leave the EU), is refreshing to see.
  • Market turmoil following the U.K.’s decision to leave the EU is causing more investors to turn to gold and Treasuries, reports Bloomberg. The yellow metal rallied more in the first half of the year than in any other year since 1974, with prices pushed up 24 percent. In addition, traders are now pricing in greater chances of a rate cut than a rate hike in September, pushing Treasury yields lower and boosting the appeal of gold.


  • Imports of gold to mainland China from Hong Kong were up 68 percent month-on-month in May, reports S&P Global Platts, totaling 115 mt and reaching the highest level since December. This figure was up 63 percent year-on-year from 70.7 mt in May of 2015.


  • The worst performing precious metal for the week ironically was gold, still up around 1.99 percent.  Perhaps not too surprising since this was a page-one story.  As central bankers assured the markets that they were ready to act, if needed, equities climbed higher and this became a headwind for further momentum in gold prices.
  • Elvira Nabiullina, chair of the Russian central bank, commented on gold reserves during an interview with a local newspaper this week, according to one Reuters headline. Nabiullina said she sees no possibility of increasing Russia’s gold and FX reserves in the near future.
  • A surge in gold prices could cut Indian demand for the precious metal to the lowest in seven years, reports Bloomberg. “Price is a very important factor for Indians and if it remains at these levels then I don’t see much recovery in demand,” said Bachhraj Bamalwa, a director at the All India Gems & Jewelry Trade Federation. Weak demand since the start of 2016 has forced dealers to sell gold at a discount to clear inventories.


  • Turnover in China’s top exchange-traded fund backed by bullion, the Huaan Yifu Gold ETF, jumped to a record $191 million last Friday following Britain’s vote. Outstanding shares of the fund also jumped five-fold from the start of the year to 1.6 billion, according to David Xu, managing director at Huaan Asset Management. Similarly, a decline of the Chinese real estate market moved billions into the country’s stock market. If Chinese investors sour on stocks and decide gold’s historic value looks tempting, this could mean the next boom for the metal, reports Bloomberg Intelligence analyst Kenneth Hoffman.  Currently the ETF only holds 16 tonnes of metal, but the creators of the fund expect it to grow to 500 tonnes in the next three to five years.
  • According to consensus data from June 28, economists are raising the probability of U.S. interest rate cuts, rather than hikes, over the next 18 months, reports Bloomberg. A hike is seen only from February 2017. Overseas, initial shock following Brexit is easing. Economists are expecting the Bank of England to add more stimulus and Japan’s central bank chief Haruhiko Kuroda said this week that more funds could be injected into markets should they be required, reports Bloomberg.
  • Citing updated commodity forecasts, Credit Suisse analysts Anita Soni and Ralph Profiti believe the price of gold could hit $1,500 an ounce by early 2017. Goldman and Morgan Stanley are among other banks increasing their price outlooks. On Thursday, Australia & New Zealand Banking Group Ltd. reported that it sees bullion rallying to as much as $1,400 an ounce over the next 12 months. If the Brexit vote spurs the world’s central banks to step up easing, currencies will be hurt and gold could be favored even further.


  • Temp jobs are the first to go in a downturn and serve as a predictor of general job trends, according to a report from BMO Private Bank. And since December, this sector has shed 27,400 jobs, reversing a five-year trend that saw it grow five times faster than overall employment, the bank writes. Compounding the trend, there has been a pickup in initial jobless claims.
  • According to a new poll by Marketplace and Edison Research, 71 percent of Americans believe the U.S. economic system is “rigged in favor of certain groups,” reports CNN Money. On this note, JPMorgan Chase & Co won the dismissal of three private antitrust lawsuits on Wednesday, reports Reuters, accusing the bank of rigging a market for silver futures contracts traded on COMEX. U.S. District Judge Paul Engelmayer said the plaintiffs did not show JPMorgan made “uneconomic” bids, or intended to rig the market at counterparties’ expense, the article continues. Engelmayer’s dismissal was with prejudice, meaning the lawsuits cannot be brought again.  This follows a 2014 court victory by JPMorgan where plaintiffs nationwide accused the bank of trying to drive down the silver price.
  • Gold miner Asanko Gold Inc. has come under attack from a Toronto-based hedge fund, reports the Financial Post, claiming the company’s stock price could plummet 90 percent. K2 Associates Investment Management alleges that Asanko’s gold resources “don’t add up” and appears to be over-inflated by a factor of two. Asanko rejected all allegations by K2.

More anomalous gold data in latest Swiss import/export figures

The latest gold import and export data from Switzerland, one of the few countries to report these flows in detail, as usual open up some interesting insights into global supply and demand.  Overall Swiss gold exports rose by around 20% month on month to 177.3 tonnes making the country a net exporter in May.  Generally Swiss gold imports and exports are pretty much in balance given that it mostly imports gold for re-refining and re-export.

While gold exports from Switzerland to China and Hong Kong both picked up in May, its principal country of imports was again the United Arab Emirates normally a recipient of Swiss gold, not a provider.  Indeed in another reversal of normal gold flows, the U.K. was again the biggest importer of Swiss gold in May, necessary, we feel, to meet the big demand in London from the principal gold ETFs which vault their gold there.  Exports to the U.S. were also unusually high.  Again any gold flows to and from the U.S are normally in the eastward direction.  We have surmised before that available supplies of physical gold in London are currently tight and this only serves to add weight to that premise and could also suggest that a similar position is arriving in the U.S. too given recent strong investor demand for bullion.

Re China and Hong Kong, exports to the Chinese mainland were 19 tonnes, up from 13.8 tonnes in April, while exports to Hong Kong were up by a very large 14.5 tonnes to 24 tonnes making the percentage of gold shipped to the Chinese mainland against that shipped directly to Hong Kong (which will also subsequently nearly all find its way to mainland China) at around 44%.  This again confirms our oft-repeated mantra that Hong Kong gold imports and exports can no longer be taken as a proxy for the Chinese figures with so much gold now going to the Chinese mainland directly.  This is a major change from three years ago when the Hong Kong:China ratio was far higher, but still some media outlets ignore this fact.

Prior to the current year, The U.K. was always a significant supplier of gold to the Swiss refineries which have specialised in melting down and re-refining 400 kg good delivery gold bars into the smaller sizes most in demand in the Asian markets.  Thus, as we pointed out a month ago when the previous set of Swiss stats were released – See: Swiss gold data raises new doubts on London’s gold stocks these reversals of gold flows, if they continue, could be an indicator of some serious tightness in supply of physical gold to the markets from traditional sources as noted above.

While exports to China and Hong Kong were substantially higher in May, they remained very weak to that other traditional gold market, India, where gold seems to have fallen out of favour in recent months.  In May the figure was only 18.5 tonnes, down 16% from an already low April figure.  Taken together with reports of substantial discounts in the local gold price, it appears that Indian buyers are nervous of the substantial gold price rise so far this year and may be holding off purchases in expectation of a price fall.

The other big anomaly in the figures was that the two biggest exporters of gold to Switzerland in May were the United Arab Emirates again with 42.1 tonnes and Hong Kong with 11.6 tonnes although the latter was a net importer in May – not the case in April.  Neither of these countries/regions are normally exporters of gold to Switzerland in any significant quantities, but are major trading centres, suggesting that the lower demand from what are probably their biggest normal export markets, India and China respectively has led to inventories running higher than traders are happy with, and with the higher prices prevailing there has been perhaps an incentive to return gold to the Swiss refiners and take profits.

We will thus be following this Swiss import/export data to see if these supply/demand anomalies continue in future months.

Switzerland January gold exports:  Mainland China much higher than Hong Kong

The latest announcement on Swiss gold exports – for January – showed that for that month the small European nation, which provides a significant percentage of Asian physical gold demand from its refineries, exported far more gold to Mainland China than to Hong Kong.  42.1 tonnes as compared with 21.5 tonnes.  A chart from Nick Laird’s site detailing the latest gold export figures is shown below.


So why is this significant?  For many years the vast majority of gold flowing to mainland China was imported first into Hong Kong and then to the mainland.  So much so that Hong Kong gold exports into the Chinese mainland were taken by much of the world’s media and analytical consultancies as being a proxy for total Chinese gold imports.  For the past few years, though, things have changed substantially with much more gold being imported directly, bypassing Hong Kong altogether.  Yet still media headlines trumpet falls and rises in the Hong Kong to China export figures as though these are still a proxy for total mainland China gold imports.  As the latest Swiss export figures show, this is most definitely no longer the case.

Hong Kong still remains an important conduit for gold imports to the Chinese mainland but its significance seems to be diminishing year on year which readers should bear in mind the next time a headline blares a fall in Hong Kong exports to China with the implication that this means that Chinese demand is falling accordingly.

Another interesting point from these Swiss figures is that over 90% of Swiss gold exports are flowing to Middle Eastern and Asian nations.  Switzerland’s own gold imports come in primarily from the UK – still the world’s major gold centre.  It flows via Switzerland for London good delivery gold bars to be re-refined and recast by the dominant Swiss gold refiners into the smaller bars and wafers which are mostly traded in the Middle East and Asia.

In January, Switzerland imported 166.9 tonnes of physical gold of which that from the UK totalled 61 tonnes – or 36.5%.  Interestingly the second largest source of gold flowing into Switzerland was from  Venezuela at 35.7 tonnes, thus confirming earlier reports that Venezuela, having only recently repatriated its gold to hold it within the nation, was now shipping significant quantities to Switzerland.  This is thought to be being used to mitigate its precarious debt position in a series of gold swap agreements via The Bank for International Settlements.

UK gold exports to mainland China dwarf those to Hong Kong

Latest UK gold export figures released coverin August show gold exports to China plus Hong Kong went 74% direct to the chinese mainland bypassing Hong Kong altogether.  This is yet another hugely significant indicator that Honk Kong net gold exports to China can no longer be an accurate guide to total Chinese imports as much of the world’s media – and some analysts who should know better – seem to assume.  See graphic below from 


To read more on this click on August UK gold exports direct to mainland China dwarf Hong Kong

Indian gold imports 730 t YTD.  So is it really top consumer?


India has now released its official figure for gold imports in August.  Prior non-official estimates had put this at 140 tonnes and the official figure is a close 138 tonnes.  Now we also have an unofficial estimate for September of a significantly lower 67 tonnes and while some have seen this as an indicator of Indian gold imports tanking – if one looks at the latest chart from Nick Laird’s site showing month by month imports for the past five years up until August, one can also see that Indian monthly import figures are hugely variable and 67 tonnes is actually a reasonable figure and certainly doesn’t yet suggest that demand is particularly weak given the very strong August figure – the fifth highest in the past five years….

To read the full article which has been published on the Sharps Pixley , click on LAWRIE WILLIAMS: Indian gold imports 730 t YTD. So is it really top consumer?

New Hong Kong gold exports support record high China demand forecast

Hong Kong exported 97.42 tonnes of gold to the Chinese mainland in September – yet another indicator that Chinese gold demand is not only alive and well – but heading for yet another new record.  Taken together with SGE withdrawals so far this year of comfortably over 2,000 tonnes already this year and annual domestic gold production of perhaps around 480 tonnes, the amount of gold disappearing into Chinese maws remains immense.

To read my latest views on the supporting data on the Sharps Pixley website, Click here





Hong Kong gold exports ever less relevant to Chinese SGE demand

An interesting graphic from Nick Laird’s group of websites.  This one shows net monthly Hong Kong gold exports to China, Shanghai Gold Exchange (SGE) withdrawals and the correlation between the two.  This is hugely relevant in the context of how significant the Hong Kong net gold export figures are in relation to overall Chinese demand as represented by SGE withdrawals.


What can be seen from the charts was that there was a much more significant correlation between the Hong Kong exports and SGE withdrawals up to Q1 2014, but after that the Hong Kong percentage has been mostly declining and was down to only 23% for the latest month for which figures are available (August).  June and July figures were even lower.   This shows that Hong Kong gold export figures are very definitely no longer the proxy for Chinese gold demand they used to be despite some analysts, and the media, assuming, or implying, that they are.

The reason for this is that Hong Kong is becoming less and less important as a supply route for gold into mainland China due to gold import regulation changes.  We have already pointed out that two of the biggest supply routes for gold into China – via Switzerland and the UK – are now shipping very significant percentages to the Chinese mainland directly, whereas prior to 2014 nearly all their gold export traffic was via Hong Kong.  (See: What is China’s real gold demand?).

We can glean these statistics directly from the Swiss and UK export figures as China publishes no direct data on gold imports to the mainland.  Whereas some gold was always going direct to the mainland and bypassing Hong Kong, a relaxation on which ports of entry and who could import gold directly has significantly moved the goalposts and undoubtedly some sources of Chinese gold imports may be moving 100% of their gold directly into the Chinese mainland as opposed to the circa 40% we are already seeing  across the major import routes from countries which do publish the relevant data.

Of course the other significant source of Chinese gold is from that mined on the mainland itself, and as a byproduct from the big base metals smelting and refining sector- possibly as much as 480 tonnes this year, up from around 460 tonnes in 2014.  This comes to around 20% of China’s likely 2015 total gold demand.

HK to China gold exports way down; SGE gold withdrawals way up. What gives?

Lawrie Williams

As can be seen from the excellent chart from below, we are seeing quite a divergence in statistics between Shanghai Gold Exchange (SGE) gold withdrawals so far this year and gold exports to mainland China from Hong Kong, which used to be seen as a proxy for total Chinese imports, but should now be discounted as such.  That is because China last year eased some of its direct import controls which may mean that perhaps as much as 40% of Chinese gold imports are currently going direct to the mainland, completely bypassing Hong Kong.  Direct mainland gold imports built up decidedly in 2015 as seen from gold export statistics published by countries such as Switzerland, the UK and the U.S.


But so saying, SGE withdrawals in week 20 (the week ending May 22nd) came to 43.4 tonnes, bringing the year to date total to 946 tonnes – around 20% up on the same week a year ago when the full year total came to 2,102.4 tonnes and also 8% higher than at the same time in the 2013 record year when the full year total was 2,197 tonnes and included a massive withdrawal week of around 117 tonnes in early May after the extraordinary COMEX gold take-down at the end of April that year.

By contrast Hong Kong net gold exports to China have, according to Bloomberg, apparently dipped to 46.6 tonnes in April from 61.8 tonnes in March and 65.4 tonnes a year earlier.  Much of the fall from April 2014 will have been due to more shipments bypassing Hong Kong, but the fall from the March 2015 figure seems to be something of an outlier given the still high levels of gold movements out of the SGE.

While there have been doubts expressed that SGE withdrawals are indeed equivalent to Chinese retail demand, it remains that all gold imported into China – either directly or via Hong Kong – together with China’s own gold production – around 460 tonnes last year – has to pass through the SGE.  Some will aver that this thus represents total Chinese consumption, but the mainstream western analysts (such as CPM, GFMS and Metals Focus) come up with far lower consumption figures (indeed 1,000 tonnes lower or more), but do recognise that SGE gold withdrawal volumes need to be accounted for somehow, but are mostly rather vague on how the discrepancy between their figures and the SGE ones arise.  Part of the discrepancy comes from a rigid interpretation of what actually comprises consumption, and there may also be an element of double counting in SGE figures with recycled gold coming back in and then out again, but this will be small. Now too figures are slightly muddied by movements in and out of the Exchange’s International section – the SGEI – but Koos Jansen, who perhaps follows the figures more closely than any other analyst, estimates the volume here so far this year as only distorting the overall figure by just under 13 tonnes. There is also an important element in gold apparently utilised within China in financial transactions and as collateral by the banks and other financial institutions, but this is highly unlikely to account for much of the differences.

Gold analyst Philip Klapwijk (former executive chairman of GFMS), who nowadays has based himself in Hong Kong and is thus close to the action, states that there has been a substantial amount of gold shipped trans-border from mainland China into Hong Kong for remelting – mostly technically illegally – which could account for the big differences as it is generally assumed that China exports no gold.  But given Hong Kong is treated statistically by the Chinese as a separate country this zero export number is obviously not the case, according to Klapwijk at least.  He put the figures as around 1,200 tonnes last year and, with an element of round tripping likely involved, this could have distorted the Hong Kong to China net gold trade somewhat.

In Q1 this year though, Klapwijk reckons the volumes of such ‘exports’ has dived dramatically as the Chinese authorities have been clamping down severely on this cross-border gold trade with Hong Kong.  But if movements to Hong Kong have fallen as dramatically as Klapwijk reckons, yet SGE withdrawals are even up on last year, this gold has to be going somewhere on the mainland.  How this will tie in with Chinese gold ‘consumption’ figures in the next quarterly analyses by the big gold consultancies is anybody’s guess.  Our best guess is they will still see ‘consumption’ drop a little in line with current reports out of China of a fall-off in jewellery demand, which begs the question as to where all this excess gold coming out of the SGE is headed?  Despite denials it has to be possible the excesses are somehow being absorbed by the PBoC – the Chinese Central Bank.  Given the Chinese have a track record of hiding the PBoC’s true gold holdings in non-reportable accounts, this excess gold could be finding its way into similar accounts thus enabling the PBoC to stick to the position that it doesn’t buy gold from the SGE.  As always there is a degree of opacity here which is hard to break through with the Chinese always playing their key economic cards close to their chest.  Draw your own conclusions here – they are probably just as good as ours!

Hong Kong becoming less and less relevant as gold import route for China

Recent Reuters headline: China’s gold imports from Hong Kong dipped to 7-month low.  The brief article which followed implied that Chinese gold demand was also dropping in commenting that Honk Kong imports remain a proxy for Chinese gold demand.  They used to be, but not any more!

A more significant article from Bloomberg on Swiss gold exports- probably by far the biggest source of Chinese gold imports – in March noted that 46.4 tonnes was exported directly to mainland China, and only 30 tonnes to Hong Kong.  Thus 60% to China and 40% to Hong Kong.  This massive change in gold export routes from a year earlier when most Swiss gold going to China was still being routed through Hong Kong, failed to elicit any comment at the time.  We had noted earlier here also that U.S. gold exports to China were increasingly being sent direct after virtually all going through Hong Kong in early 2014: 36% of October U.S. gold exports to China went direct rather than via Hong Kong

Now we don’t know exactly what proportion of Chinese gold imports are now going in directly and bypassing Hong Kong, but judging by the Swiss export data it could be as much as 50% or more and while Hong Kong obviously remains a significant route for the gold imports it looks to be becoming less and less relevant – particularly given further restrictions being lifted on the number of banks and companies allowed to import gold directly.

Thus the days of Hong Kong figures being relatively close to providing a very good idea of total Chinese gold imports would now definitely seem to be ending which will make estimating overall Chinese gold imports ever more difficult given that mainland China does not report this data. But on the basis of the latest Shanghai Gold Exchange withdrawal figures which are, if at least nothing else, an excellent trend indicator of overall Chinese gold demand, the Asian Dragon could be heading for a record year for gold demand with around 780 tonnes withdrawn so far this year from the Exchange up until one week ago.  While it is far too early to make an annual estimate given these flows out of the Exchange tend to fall off mid-year, before picking up again from September onwards, should withdrawals continue as expected we could well be in for a comfortable new record come the year end.

How much gold is now going directly to mainland China? 36%?

By far the largest exporter of gold to China and to Hong Kong is Switzerland and its latest figures for 2014 suggest that 36% of Swiss gold exports are now going to mainland China directly

Lawrie Williams

Latest precious metals export data out of Switzerland for the full 2014 year suggest that in that year, taking gold specific exports only, around 36% of the gold exported to Hong Kong and China  combined actually went directly into China rather than via the former British Crown Colony.  As various reports in the media have suggested, India was the biggest recipient of Swiss gold at 471.2 tonnes, but China and Hong Kong, which after all is a special administrative region of China, together took in 590.4 tonnes, further suggesting China, contrary to some reports, remained the world’s biggest gold consumer last year..

Totals Swiss gold exports for the year were some 1,746 tonnes and the top 10 importers of Swiss gold in 2014 are set out in the table below.  Between them they account for over almost 90% of all Swiss gold exports.  The next three most significant importers of Swiss re-refined gold were France with 37 tonnes, the UK with 29.8 tonnes and Malaysia with 22.6 tonnes.

Table: Top 10 recipients of Swiss gold exports

Country Tonnes imported % of Swiss Gold exports
1.       India 471.2 27.0
2.       Hong Kong 377.2 21.6
3.       China (Mainland) 213.1 12.2
4.       Singapore 134.2 7.7
5.       Germany 88.9 5.1
6.       Turkey 69.1 4.0
7.       United Arab Emirates 66.3 3.8
8.       Saudi Arabia 60.5 3.5
9.       Thailand 44.4 2.5
10.   Italy 43.6 2.5

Source: Swiss Federal Administration

So what is the significance of this?  For many years very little gold was imported directly to mainland China.  Nearly all came in via Hong Kong.  So Hong Kong (which published its gold import/export data) was widely seen as a proxy for total Chinese gold imports.  China itself didn’t publish such data so what might have been coming in directly was widely disregarded by Western analysts as of no consequence.

But last year, China moved the goalposts, and eased the path of gold imports directly to the mainland from other countries than Hong Kong.  However because China doesn’t publish direct gold import data no-one really knows exactly how much gold is now flowing into China directly and although Hong Kong is now not the only significant import route Western mainstream media often imply the Hong Kong data still equates to Chinese demand – so the recent news that exports from Hong Kong to China fell 32% last year was widely seen as an indicator that Chinese consumption fell by a similar amount.

Thus the latest official export data from Switzerland (as do the latest figures for U.S. gold exports) show that for a large part at least of China’s gold imports, around a third are now going into China directly which makes the Hong Kong figures ever less indicative of the overall picture.

The other interesting point from the Swiss statistics is that this small nation takes in, re-refines and then exports a volume of gold equivalent to around 56% of the world’s newly mined annual gold supply.  The volumes of gold being exported to other countries than India and China/Hong Kong are also worthy of note – particularly imports into Singapore and Thailand being other key Asian gold consumers – and Saudi Arabia, Turkey and the United Arab Emirates, which between them accounted for  as being strong indicators of Middle Eastern demand.  Between them these three states imported 195 tonnes of Swiss re-refined gold – some of which was doubtless destined for Iran and Islamic State, both of which are cut off from direct gold supplies from normal sources.  Gold exports and imports can be a murky business at the extremes!

36% of October U.S. gold exports to China went direct rather than via Hong Kong

Latest statistics from the USGS make for interesting reading – not just because they show U.S. gold output has been continuing to fall – it’s down 7.4% year on year to date – but for the country by country export data.  We have been commenting on for much of the past year that imports to mainland China via Hong Kong remain significant, but by no means as significant as in the past.  We have come up with this viewpoint through extrapolation of Chinese Shanghai Gold Exchange data  which has been high – particularly in the  final quarter of the year – even while net gold imports from Hong Kong have slipped sharply.  Thats an anomaly that is hard to explain unless substantial gold imports are coming in by other routes.

But I’ve just received some interesting statistical data from the USGS which shows that a substantial proportion of U.S. gold exports to Hong Kong and China in October went directly to the mainland.  Further checking reveals that this was also the case in September, although not before.  The October figures were 12.9 tonnes to Hong Kong and 7.4 tonnes directly to the mainland – or 36% of the total.  By contrast, in October 2013, only 0.36 tonnes were shipped direct to the mainland and 17.8 tonnes to Hong Kong.  A very substantial change indeed.  These latest figures tie in remarkably well with our opinions on the breakdown of Chinese gold imports and that while Hong Kong remains a significant import route, it is not nearly so important in the overall picture as it used to be.

I have commented recently (yesterday) in an article on Mineweb on the continuing emphasis by mainstream media on the Hong Kong to China export figures which taken at face value would seem to present a misleading picture.  Do click on How significant was the 32% fall in Hong Kong exports to China  to read this article in full.  A second more detailed article on the U.S. October mine production and export data is also now up on Mineweb.  Click on U.S. 10-month gold mine output falls 7% y-on-y to read.