Koos Jansen
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Koos Jansen
Posted on 25 Jun 2014 by

LBMA Forum Singapore: SGE Chairman Confirms Chinese Gold Demand In 2013 Hit 2000 MT

I just received a very interesting email from Torgny Persson, chief executive officer of BullionStar.com, who is attending the LBMA forum in Singapore today.

Dear Koos,

Following up on our brief discussion before, I’ve continued to follow your excellent blog and have some breaking news for you. I’m writing to you from the lunch break at the LBMA forum in Singapore today.

Among the speakers were Xu Luode, Chairman of the Shanghai Gold Exchange, and Zhou Ming, General Manager of the precious metals department for ICBC.

Mr. Xu started his speech by referring to the official figure of demand for the Chinese gold market 1189 tons, as published by WGC, but mentioned twice that the figure for consumption is likely higher. Later in the speech Mr. Xu mentioned and I quote the official translation in the headphones “..as the Chinese consumption demand of gold hit 2000 tons in 2013”. There you have it. The chairman himself said it out straight.

Other key takeaways from the Chairman’s speech:

– The government and the government agencies are strongly supporting the gold market development in China generally and the Shanghai free trade zone specifically.
– There’s a London fix for gold, there should also be a fix in China.
– The free trade zone will open up the Chinese gold market internationally. Settlement will be in RMB but with the possibility to freely exchange to other currencies.

The chairman focused especially on the strategic opening up of the Chinese market internationally and China influencing the international gold market.

Mr. Zhou’s speech was equally interesting.

According to Mr. Zhou, the commercial bank retail volume including sale and repurchasing in China was 500 tons in 2013, up 165 % compared to 2012. Of this ICBC stands for 200 tons. The four largest banks have 80% of the market.

Mr. Zhou also mentioned that the transaction increase for paper gold was up 27 % in 2013 i.e. much less than the physical demand. The volume of the OTC gold derivates market in China in 2013 was 550 tons according to Mr. Zhou and the market for interbank borrowing and leasing was 1300 tons in 2013 up 160% compared to 2012.

ICBC has over the last years restructured their precious metals department with a speciality branch in Shanghai. ICBC has more than 300 dedicated warehouses for gold in 36 provinces and more than 20 million gold clients!

The customers buy for ‘personal use’. It’s rare that anyone sells back.

Mr Zhou also interestingly mentioned that ICBC “can not meet the demand of the market” and that we will see “the price of derivatives delinking from the (physical) spot price”. He said that fluctuations will affect the pricing system in gold but that the market will retreat to the fundamental analysis of gold supply and demand to rebuild the current market structure (my comment: obviously hinting that the physical Chinese market will take over the current derivative markets flawed price setting mechanism). He was talking about the shift of trading distribution and price transmission mechanism in the light of this.

To summarize, I was stunned about the frank and straightforward remarks by both of the above gentlemen and just wanted to share with you as I know many in the industry including big media is reading your blog.

See attached pictures of Mr. Xu and Mr. Zhou from the LBMA forum one hour ago.

Kind Regards


LBMA Singapore 2014 Xu Luode
LBMA Singapore 2014 Xu Luode
LBMA Singapore 2014 Zhou Ming
LBMA Singapore 2014 Zhou Ming

Koos Jansen
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  • http://google.com/+TiongHumSoh Tiong Hum Soh

    Your dogged effort to sniff out the right number for Chinese import is now vindicated. Congratulations.

  • Salacious Monk

    These CXOs and “many in this industry” who read your blog should make donations…

    • In Gold We Trust

      I agree.

  • Zhang An Ping

    I am a Bullionstar customer.

    And that is my point; whilst I have no doubt whatsoever about the integrity of these people – and the others Koos variously quotes and refers to in Singapore, Switzerland and elsewhere – these are commercial operators with a vested commercial interest in both talking the market up, and in encouraging readers to get in before its too late and the price rises due to all this alleged pent-up demand

    I had considered going to this (public) event myself http://www.lbma.org.uk/upcomingevents/lbma-singapore-forum , but with tickets costing around SGD1,200 I thought better of it – and Bullionstar themselves are having a free “Grand Opening” launch event in early August, so we can save pressing-the-flesh until then :-)

    • http://goldchat.blogspot.com/ Bron Suchecki

      I do not recall the statement that consumption demand was 2000t. Neither did a journalist who was there, whom I checked with, who thought the comment referred to 2000t of turnover at SGE.

      I think given the interpretation was live plus recall of the listener, I would not take this as confirmed. I saw a number of times the interpreter’s wording of what was being said about some slides differed to the interpreted slide wording when it was clear the speaker was referring to the slide. Another example, Zhang’s figure of 8974.74t of total stock in China was interpreted as “China’s reserves” on the English slide when it was clearly total public and private stocks.

      Unfortunately this post has now been picked up and broadcast by many websites, so I doubt this one will be put back in its box.

      • In Gold We Trust

        Thanks Bron, I was about to ask you for confirmation (because I knew you were in the same room).

        The reason I published it was because he kind of said the same thing in this article


        and this


        And it’s in line with my analysis about “SGE withdrawals equal Chinese wholesale demand”.

        I will try to call Xu on Monday to ask what he said exactly.

        • In Gold We Trust

          On another note, in 2013 paper gold “volume” was 11614 tonnes, withdrawals from the vault accounted for 2197 tonnes. (you tweeted vault deposits were 2198 tonnes, according to Xu)

          • http://goldchat.blogspot.com/ Bron Suchecki

            I remember him saying he thought the consumption figures was higher, that caught my attention, but I do not remember any mention of 2000t in that context. The journalist thought it was turnover, but I can’t recall the context of 2000t statement. Whatever context, the exactly even 2000 figure is unlikely to be meant as an accurate figure and just a general or approximate statement IMO.

          • In Gold We Trust

            Yes, it’s an approximation. 1540 tonnes were net imported, 428 tonnes domestically mined and 229 tonnes had been “recycled” through the SGE. What was demand?

            I hope the LBMA will publish the transcript.

        • In Gold We Trust

          I just called the SGE. I couldn’t get hold of Xu, but the SGE employee I spoke to, who attended the LBMA forum in Singapore as well, confirmed to me XU mentioned that “more than 2000 tonnes was delivered into consumers hands and that could be interpreted as demand” – his words.

      • Golden Truth

        Bron, you are a Shill. Too bad we can’t put you back in your box.

  • Reymidas Fund

    Greetins from Argentina. I suspect he will soon release a statement after a secret call from NY or London: “I would like to comment that the amount of gold is half of what I said due to my error. I apologize”.

  • Michael Yates

    “There should also be a fix in the SGE”

    My heart broke when I read that. Same old cronies no matter what country gets power.

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