Chinese Gold Demand Dropping
It has been a bit silent on In Gold We Trust for a few days as I was working on moving this website to a new server, which didn’t happen as planned. Yesterday the website has been offline for hours due to transition. I was forced to move because the old server couldn’t handle the repeated DDoS attacks, the new one is supposed to be better armed providing visitors, finally, stable and faster access.
Anyway, I still owe you guys un update on withdrawal numbers from the SGE, published last friday April 18. SGE withdrawals, which equal Chinese wholesale demand, in week 15 (08-04-2014/11-04-2014) accounted for 21 metric tonnes. A lot of gold but the lowest numbers since March 2013 – also due to the fact the SGE was closed on April 7, leaving only four days of trading in week 15. Nonetheless, demand has been in a downtrend for six weeks in Shanghai and premiums have been sub zero since late February, which doesn’t hint at a supply shortage on the SGE. At the same time we saw GOFO rates being negative in week 15 in western markets, which does hint at supply shortages. This situation illustrates the PBOC’s gold policy; gold is allowed to be imported but not exported.
Overview Shanghai Gold Exchange data 2014 week 15
- 21 metric tonnes withdrawn in week 15 (08-04-2014/11-04-2014)
- w/w – 16.7 %
- 606 metric tonnes withdrawn year to date
My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information read this.
This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.
This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).
Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.
In Gold We trust