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World Gold Council Continues To Hide Insatiable Chinese Gold Demand
Submitted by Koos Jansen via BullionStar.com,
The amount of gold withdrawn from the vaults of the Shanghai Gold Exchange (SGE), which equals Chinese wholesale gold demand, accounted for 45 tonnes in the trading week that ended on 6 November. Year to date SGE withdrawals have reached an astonishing 2,210 tonnes, which is more than the full year record set in 2013 at 2,197 tonnes. With nearly two months of trading left in the Chinese gold market, SGE withdrawals are estimated to reach more than 2,600 tonnes.
Please read The Mechanics Of The Chinese Domestic Gold Market for a comprehensive explanation of the relationship between SGE withdrawals and Chinese wholesale gold demand.
If Chinese gold import will be higher than in 2013 remains to be seen. Two years ago China imported 1,507 tonnes in standard gold bars. According to my estimates China is on track to import 1,400 tonnes in 2015. This year’s SGE withdrawals can have been supplied by more recycled gold than in 2013 that in part replaces gold import.
SGE withdrawals = mine + import + recycled gold supply.
SGE withdrawals can only be supplied by domestically mined gold, imported gold or recycled gold (ie scrap). Because China is one of the few countries that doesn’t disclose its gold trade data we must estimate Chinese gold import from data provided by gold exporters such as the UK, Switzerland, Hong Kong and Australia. Their foreign trade statistics show China has net imported more than 1,032 tonnes of gold in the first three quarters of 2015. In addition, Chinese domestic mining output has been 357 tonnes, according to the China Gold Association, which is prohibited from being exported. Without counting scrap supply apparent physical gold supply in China was 1,389 tonnes in the first nine months of 2015, yet, the World Gold Council disclose Q1-Q3 Chinese gold demand at 736 tonnes. Again, for years in a row now, there is more than twice as much physical gold being supplied to China than what is presented as demand to the average gold investor by the authority on gold (the World Gold Council).
How can so much gold be supplied to China without someone buying it and thus being genuine demand? It cannot. Chinese gold demand as disclosed by the World Gold Council (WGC) is fallacious.
Western consultancy firms have presented numerous arguments to explain the difference between SGE withdrawals and Chinese consumer gold demand, but none of them have proven to be complete. First it was industrial demand that should have caused the difference (WGC 2013), then it was stock movement change (GFMS 2013), then it was round tripping (WGC 2014), then it was gold leasing (WGC 2014), then it was official purchases (WGC 2013), then it was recycled gold (CPM Group 2014, GFMS 2015), even gold export from China has been tested to fool gold investors (PMI 2015). Although some of these arguments are partially true (read this post for an overview) they cannot fully explain the difference, which is at least 2,500 tonnes.
Does the mainstream media ever investigate this odd discrepancy? Of course not, according to them gold is just a pet rock. Nobody cares about 2,500 tonnes of gold that have vanished into a black hole somewhere in China. Whilst, coincidentally, China is the second largest economy in the world that has stated the US dollar should be replaced as the world reserve currency. At the same time the global economy is still struggling to recover from the biggest financial crisis in recent history by printing money, which seems to do nothing more than buy time. But Western media refuse to connect the dots.
Also note, none of the arguments listed above have been carefully described by the consultancy firms that presented them. A few sentences in a report from the World Gold Council were enough to convince the Financial Times to copy-paste the conclusion, although being factually incorrect. Never do the firms thoroughly describe the process of gold leasing or round tripping. Please, show me how gold leasing has inflated SGE withdrawals by 2,500 tonnes and I would be happy to further investigate the flows of gold through the SGE. The most recent sign from mainstream analysts with respect to this topic was communicated through a tweet. 140 characters achieved to set in motion a renewed wave of believe Chinese gold demand numbers make perfect sense.
Numbers complex, but huge gap between SGE withdrawals and demand data is simple - leasing + round tripping #LBMA
— BullionVault (@bullionvault) October 20, 2015
Doesn’t this subject deserve a little more debate? By the way, isn’t there a contradiction in “numbers complex” and “huge gap between SGE withdrawals and demand data is simple”?
And there is more. Some analysts speculate the PBOC is the secretive buyer of the ‘surplus’ imported gold in China. I would not agree (click here, here and here for my posts on this subject) and I suppose the WGC agrees with me. From the WGC in 2014 [brackets added by me]:
China’s authorities have a range of options when purchasing gold. They may acquire some of the gold which flows into China [required to be sold through the SGE]…. but there are reasons why they may prefer to buy gold on international markets: gold sold on the SGE is priced in yuan and prospective buyers – for example, the PBoC with large multi-currency reserves – may rather use US dollars than purchasing domestically-priced gold. The international market would have a lot more liquidity too.
The WGC suggests the PBOC does not buy gold through the SGE, which implies official Chinese gold demand complements SGE withdrawals and thus the difference of 2,500 tonnes. But then the supply and demand balance from the WGC is still missing 2,500 tonnes. Or is it…?
After six year of silence China’s central bank, the PBOC, announced in July 2015 it had accumulated 604 tonnes in official gold reserves (that jumped from 1,054 to 1,658 tonnes). In the books from the PBOC the 604 tonnes were added to their reserves in the month of June. Subsequently, in July, August and September the PBOC increased its reserves by 50.5 tonnes in total.
The World Gold Council includes all official gold purchases in their Gold Demand Trends (GDT) reports. Below is the total supply and demand table from the WGC released in the GDT report released for Q3 2015.
As we can see central bank purchases are included, though if we look at total official gold demand for Q2 2015 it states 127.9 tonnes (Q3 2015 is 175 tonnes). Apparently, the World Gold Council did not include the 604 tonnes increment from the PBOC in their total supply and demand balance – and likely will not in any forthcoming balance. But the PBOC must have bought it from somewhere right? 604 tonnes couldn’t have fallen from the sky, it must have been supplied by disinvestment, mining output or scraps. Shouldn’t this demand by the PBOC have been disclosed somewhere in a supply and demand overview? We were already missing 2,500 tonnes from the WGC numbers and now we have to add another 604 tonnes.
From the GDT Q3 report we can read:
The People’s Bank of China (PBoC) confirmed in July that its gold reserves had expanded by over 50% since its last announcement in 2009. At 1,658t, that put China at number six in the global rankings. Subsequently, the PBoC has begun regularly to report changes to its gold holdings and has confirmed an additional 50.1t of purchases between July and September.
Did you notice the WGC refrains from mentioning the PBOC bought 604 tonnes, but conveniently writes the PBOC had “its gold reserves … expanded by over 50 %”? This way another 604 tonnes are hidden from the World Gold Council’s total supply and demand balance, which in my opinion is nothing more than a vague mirage of true global gold supply and demand.
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#AuditTheChiComs
...and Zerobrains continue to hide the world's insatiable appetite for Bitcoin.
Why does an archaic, never used, valueless rock need a global council?
Could it be to influence information flow, so as not to upset global USD hegemony?
China is building a pyramid made of solid gold. They need 6 gorillion tons to make it happen.
No problem. China's got thousands of tonnes of gold plated tungsten. Same thing to them, right?
Here's my theory ... The Chinese purchase 2500 tons of gold on world markets and import it. It is promptly hidden in packages of ball bearings, loaded into containers, shipped to Long Beach, transported to warehouses, unpacked, taken to gold dealers, exchanged for cash, and then the cash is used to buy houses. Thats how the Chinese evade currency controls and that's why there's an unending roundtrip flow of the metal.
nope everyone isn't a reard like ya
Bitcoin cannot stand quantum computing, because it can't adapt to having public-private key pairs brute forced. You can't just use a different algorithm. You have to create a new blockchain (create a new coin). Like any other technological thing, it will become obsolete. I'm an IT consultant and don't trust your bitcoin. I'd rather buy and hold gold.
No that's stupid. First of all, there are no quantum computers on teh market and even if there was, Bitcoin (and all of teh world's banking system) would not be vulnerable. Very much doubt you work in IT at all...
Google is planning a ‘watershed’ quantum computing announcement for December 8... just search on Google.
Quantum computing is coming soon. Sorry for your loss.
Steps to make bitcoin quantum computing resilient:
1. Demarcate block height at which proof-of-work algo is changed.
2. Change proof-of-work algo to Scrypt, which unlike SHA, would require quantum memory.
3. When quantum memory becomes a viable technology, repeat 1. and 2. with yet another proof-of-work algo change.
Learn yer facts, mr IT consultant.
lol... whatever... bitcoiners can't even raise the blocksize from 1MB to something else. Decentralization will kill bitcoin, it's simply not agile enough.
Wake up.
Bitcoin can adapt to quantum computers by amending its use of crypto. Here's just one proposal from two years ago:
https://bitcoinmagazine.com/articles/bitcoin-is-not-quantum-safe-and-how...
I agree Bitcoin at some point down the line may fall out of favor compared to a technologically superior cryptocurrency that popular consensus deems outcompetes Bitcoin by providing substantially better service as digitally transferable money.
Gold is better for physical transfer absent electricity. For digital payments, gold is not a player. Digital payments unlock tons of value-creating commerce that would not have been possible otherwise.
HAHAhahahahaha
Yes, the demand is so insatiable that Bitcoin dropped from $500 to $300 when the trading became "insatiable"
Stacking Gold is like playing Poker... sooner or later somebody has to Show their cards
Gold is God.
I mean Gold is Good.
Aside: Your Zen for the Day: Having voted for Obama is like winning the special olympics. Even though he won, you're still retarded
He did change a lot!
He's like that retarted uncle who wants to fix your tv when it's not broken and before you know it, the house is on fire and the fridge just exploded while he's yelling "where the fuck are my golfclubs!"
I only voted once, so I'm merely 'special.' Don't macroaggress me, dude.
I could meditate on that if I weren't so damned confused ;-)
That's not very nice
That's the next war...
surely this is just more evidence supporting the phony paper price activity in the Gold and Silver markets in London and New York....
thanks.
The WGC has always been a joke for as long as I can remember (1990's).
They have never told the truth on anything concerning real physical supply and demand issues, let alone discuss the COMEX paper fraud, or Central Bank interventions.
The ChiComs will let us know - when they want us to know.
I think a few SunTzu quotes are in order
Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent's fate.
Pretend inferiority and encourage his arrogance.
He who is prudent and lies in wait for an enemy who is not, will be victorious.
Problem is, if the Chinese and Russians are poised to take control one day we are all fucked
"... if the Chinese and Russians are poised to take control one day we are all fucked"
The Chinese are waiting for the right time to fu.k the Russians.
The Chinese have a long memory and have not forgetten the many times that the Russians have fu.ked them.
Koos is the best public analyst on this topic by far.
Thanks for your efforts, Koos!
When I think of bullshit, two things immediately come to mind. President Obama and any numbers having to do with the acquisition or sales of gold.
the u.s. Dollar is the King of the World!
^S-A-R-C-A-S-M^
Eventually something has got to give..
WW3 Ain't gonna be cute..
Keep stackin' bitchez!
You conveniently left out that China has been producing 400 metric tons of gold a year since 2010. There's 2000+ tons right there. When will you gold bugs learn, the market hasn't bottomed until the last true believer has thrown in the towel. Since you true believers refuse to give it a rest, refuse to ever acknowledge any corrections, let alone pullbacks, I guess a bottom is far off.
YAWN.
Before you fall asleep, consider this tidbit of information. The "true believers" do not have any influence whatsoever on the pricing of gold or gold releated equities. Hedge funds, central banks, governments, producers, and investment banks are the only entities with enough capital to meaningfully impact the gold market.
The market will bottom when TPTB decide it's time, and not when the last "true believer" throws in the towel.
Okay, now off to bed Doc.
It's not so much the "true believers" who influence the market, but the billions of people buying gold jewelry and some buying coins or bars (the true believers). They have much more influence on the price of gold than the institutions.
The institutions and funds may buy gold, but they will also dump gold as soon as it's no longer returning a profit. It's the jewelry and true believers that really dictate the price. Central banks? To a minor extent, but they really don't buy enough gold to make a huge difference.
The power of billions of small buyers? Think about other markets, like copper. The price is almost entirely dictated by individuals through their purchases of goods. Everything from electronics, to cars, to homes. (homes don't have much copper in them anymore, all the plumbing is now plastic), but they do have copper wiring.
And since 2000 there's been about 30,000 to 35,000 tonnes of NEW gold mined worldwide. In the next decade, there's going to be ANOTHER 24,000 tonnes of NEW gold in the system.
That doesn't even include the the hundred thousand plus tonnes already in circulation.
And they're all up in arms about a thousand tonnes? That it's such a conspiracy???
This ridiculous article, and the others like it are a bug todo about nothing.
Your Quote: "there's going to be ANOTHER 24,000 tonnes of NEW gold in the system." and thats it? Thats the aprox. time at which gold from the earth runs out? Mr. Miss Information.
I'd like to welcome you to the 1970's. Huge panic about reports that there was only 10 years of oil left on earth. Could you remind us again how that doomsday prediction ended?
Just like you're predicting there's only 10 years of gold supply left on earth. HAhahahahahaha
Also, how can you run out of something that's never used up? It's not like grain or oil where annual production is used up every year and gone. Gold just keeps accumulating.
The only reason that much gold has been mined in the last 20 years or so is because of the profits available at the higher prices, causing mine expansion, exploration, etc. At current prices gold cannot be profitably mined by most mining companies. Many are cutting back exploration and closing mines. It takes many years to bring a new gold mine online, so over the next several years (even if prices go up) it is unlikely that current production levels will continue. So, you're assessement that another 30-35K tonnes of gold seems highly unlikely. Furthermore, the existing 158K tonnes of gold is still a miniscule amount. If everyone on the planet wanted an ounce of gold, there would not be enough gold to go around (they would still be 2 billion ounces short).
For what it's worth.
There are still LOTS of mines, especially large mines, that are profitable at $800/oz or less. The mines you say are unprofitable are smaller, lower grade deposits that started recently because of the higher price of gold. Some of the biggest mines on earth are producing at under $600/oz and down to $400/oz.
There are also smaller mines that are opening now that are producing at $600/oz.
Go to the PDAC convention sometime (I go every year). There are 500 booths with small and mid sized companies selling their finds and deposits to investors (developers) or larger companies. Every big miner of precious metals is there too. You get a very good idea of the costs of mining deposits that the companies and prospectors are selling. Most of them have a PEA (Preliminary Economic Assessment) which analyzes all the costs and gives cost per oz.
This year the show was smaller than normal. Attendance was "only" 24,000 people. When things were booming, attendance was around 35,000....
I said 24,000 tonnes over the next 10 years, not 35,000 tonnes. But realistically, over the next 10 years there will be about 20,000 tonnes mined, which takes into account declining production.
Bitchez, my 2500 tons has been outed.
Those that talk about Gold security, have no security.
I'll be the first to admit I'm a little ignorant on some of this world trade and gold purchasing. Is it possible that China has been using its own fiat currency to secretly purchase gold in foreign countries va its own citizens then smuggle that gold back to China? That way, a lot of gold makes its way back to China but is off the books. I suppose it would be easy to transport gold via shipping container particularly when melted down to look like another object then painted, if that were even necessary. It's very easy to purchase gold from a bullion supplier. If done over many years time, it's very easy to increase your gold in the Treasury without any accountability whatsoever. Even if done through legitimate means such as banks, make your purchase then head back to China. There are plenty of Chinese tourists coming into America for instance every day. What would keep the citizens from keeping the gold themselves? The threat of prison time or death of course. This could be done over time with thousands of purchases. A little bit adds up. Of course, this is what Chinese spies would be good for also.
Koos is one of the barely palatable pundits left.
"How can so much gold be supplied to China without someone buying it and thus being genuine demand? It cannot."
Sure it can. You just don't know how.
China sells 1000 tons, China buys 1000 tons, China sells 1000 tons, China buys 1000 tons, China sells 1000 tons, China buys 1000 tons.
And you go:
WOW CHINA BOUGHT 3000tons !:P They own 3000 tons OMG!
You can't just say about withdrawns without saying about deposits otherwise it is just manipulation
It's high time mining company management teams stop supporting this counter-productive "trade organization." It was a major player behind the birthing of the GLD and other ETFs which, on the face of it, isn't necessarily a bad thing because financial service product offering evolution has been with humanity for a very long time. But clearly, the ETFs had a major impact to the mining industry as a percentage of capital flows to ETFs now, versus miners, and also, because the damn ETFs are now a play toy of the bullion banks to facilitate precious metals market manipulation.
Then you have the problem with the WGC championing jewelery as the cornerstone of their marketing plan for years. Uhhh.... OK. Fine. But what the heck have they done for furthering Western investment demand for real physical? I submit: jack sh*t.
The industry has a problem here... It's not just that the WGC couldn't tabulate Chinese demand correctly even if they tried. The problems are manifold and systemic. Some would argue that the WGC is compromised by the bullion banks and the powers that be. I'm not prepared to go that far because there's no real, hard proof. But heck, their actions certainly are supportive of the goals of the gold cartel.
How about WGC's influence over India and India's plans for attempting to grab citizen and temple gold? WGC sees those efforts by India as a positive development. Hello?
Wake-up mining CEOs. Your interests are not being served.
Eric Dubin, independent analyst and managing editor, The News Doctors
The CEOs answer not to their shareholders, but to their finaciers. The financiers are in large part the same entities seeking to control the price of gold. Must keep the spice flowing, but at as low a price as possible. Mining profits are not even a consideration - let alone a priority.
Absolutely! And when the miners can't pay their loans, guess who gets title?! Agents of The Great Red Dragon. Just wait for the acquisitions and mergers to start again. Just like back when Barrick grew by the same process. Greater control in fewer hands.
That's true in many cases. But keep in mind that a sizable percentage of the funds flowing to the WGC are from the larger mining companies that have a bit more flexibility versus having to prostrate themselves.
how much are zios hoarding? Hard to believe they are not filling their boots as well... where is the data on that? Or perhaps they have all the 'west's' gold
Hah ha
and the west has 300 times the paper gold
Fooling everyone
How was the Indian demand for Diwali? Ohhhhhhh, ZH conveniently didnt post any articles on that. How convenient.
Keep stacking!