Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 31 Jan 2014 by

Chinese Gold Rush Heating Up

In the trading week from January 20 – 24 physical gold withdrawn from the SGE vaults accounted for 57 tons, this is the third week in a row SGE withdrawals have been more than weekly global mine production. In the first 24 days of 2014 withdrawals from the SGE accounted for 216 tons. With one trading week left this month it’s very likely January 2014 will break the all time record of monthly withdrawals, surpassing the 236 tons from April 2013. Is this the height of the Chinese gold rush?

SGE withdrawals 2014 week 4

SGE vs COMEX ™ Jan YTD 2014  

Demand for gold has been strong due to the celebration of the Chinese lunar year, the year of the horse, starting January 31. Across the nation people buy golden gifts for each other, especially by these low prices. It’s quite clear now that the Chinese people will only buy more  physical gold as the price remains low, or will further drop. They are not scared of a loss in value, as it has been in their culture for thousands of years to save in gold as a core asset. The young people, this is taught by the elder. After many years of economic suppression they regained their freedom to do so, being spurred by newly acquired wealth.

Golden Chinese horse

Bloomberg reported on a shopping spree in retail:

“Older people believe gold brings good fortune and keeps its value,” said Jiang, who left in search of another store because the small horse charms she wanted for her nieces and nephews were sold out. “Gold gifts for children teach them about investment from a young age.”

“Lower gold prices give an extra boost to demand,” said Yang Chunyan, an analyst at Orient Securities Co. in Shanghai. “Sales of gold gifts typically accelerate in the two weeks leading up to the lunar new year and have really taken off.”

Meanwhile, in some parts of Asia there is a scramble for safe deposit boxes at banks to store physical gold. According to a source in the mainland, January 7:

HSBC, Bank of China. Dah Sing Bank, Bank of East Asia, Shanghai Commercial Bank, ANZ, Citibank, Hang Seng Bank, NONE have available Safe Deposit boxes – all occupied and there is a waiting list.

Soon after he travelled to Singapore, on January  28 he wrote me:

Same problem with Safe Deposit boxes in Singapore. I opened an account with Standard Chartered Priority Banking today, for boxes they have an 18 month waiting list. I also tried DBS, OCBC, HSBC, Maybank, ANZ and Citibank, no safe deposit boxes available.

Overview Shanghai Gold Exchange data 2014 week 4

– 57 metric tonnes withdrawn in week 4  (20-01-2014/24-01-2014)
– w/w  – 4.67 %, y/y + 39 %
– 216 metric tonnes withdrawn year to date

My research indicates that SGE withdrawals equal total Chinese gold demand. For more information read thisthisthis and this.

This is a screen dump from the Chinese SGE trade report; the second number from the left (本周交割量) is weekly gold withdrawn from the vault, the second number from the right (累计交割量) is the total YTD.

SGE withdrawals week 4 2014

This chart shows SGE gold premiums based on data from the Chinese SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

SGE gold premiums

Below is a screen dump 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.

Sge premiums week 4 2014

Koos Jansen
E-mail Koos Jansen on:

  • Turd Ferguson

    Again, Koos, thanks for all you do. Great stuff.

  • Ferdinand The Bull

    Koos, Thank you. It is really helpful to get a perspective directly from China. So much in the states is twisted, it not easy to know who to trust

  • Joshua Roberts

    Premium coverage.

  • RHD

    Koos, probably repetitive to many other comments, but thank you for your insight and articulate POV.
    Best,
    R.

  • Rory

    Thanks, Koos. Be on the look out this coming week for the latest interview with Jan Skoyles. We discuss this article and she, along with the rest of us at SGTReport, give you the props you deserve! Keep up the outstanding work and we will speak with you soon.

  • Hugh

    Great work. I’d love to see something about Chinese gold loan schemes if you can find that.

  • Michaelprotects

    I will die happy having seen the look of horror on bankers, western investors, and sheeple, who realize(too late)that gold is money and are unable to trade their pieces of paper for any.

  • Michael

    Thank you Koos. Are all these withdrawals from the SGE just for domestic use?

    • In Gold We Trust

      Yes

Copyright Information: BullionStar permits you to copy and publicize blog posts or quotes and charts from blog posts provided that a link to the blog post's URL or to https://www.bullionstar.com is included in your introduction of the blog post together with the name BullionStar. The link must be target="_blank" without rel="nofollow". All other rights are reserved. BullionStar reserves the right to withdraw the permission to copy content for any or all websites at any time.