We now have official confirmation from the China Gold Association (CGA) that Chinese wholesale gold demand in 2013 reached 2,200 tonnes, in contrast to what all Western consultancy firms and news outlets have been reporting. On September 11 the China Gold Yearbook 2014 (that covers the financial year 2013) was released by the CGA on the China Gold Congress in Beijing.
As you can read below in the translation from a Chinese press release about the China Gold Yearbook 2014, the CGA states Chinese wholesale gold demand in 2013 was 2,199 tonnes; bullion import 1507 tonnes, doré import from overseas mines 17 tonnes and domestically mined gold accounted for 428 tonnes. (scrap supply must have been 247 tonnes)
Why the Western media don’t report on these numbers is “a mystery”. Remember the 1,500 tonnes net imported in 2013 by China exclude PBOC purchases!
This was the setup of the China Gold Congress Beijing 2014.
- Hosted by: the China Gold Association (CGA) and the World Gold Council (WGC).
- Supporters: the People’s Bank Of China (PBOC), and more.
- Strategy Partners: the Shanghai Gold Exchange (SGE), the Shanghai Futures Exchange (SHFE), Industrial and Commercial Bank of China (ICBC).
- Media partners: Reuters, and more.
- Cooperate Partners: CPM Group, and more.
At 16:00 GMT+8, on September 11, 2014, the China Gold Yearbook 2014 was presented on stage by the CGA.
Too bad the Western media didn’t catch the content of this report, luckily the Chinese press did notice it.
The information the CGA publishes in English about Chinese non-government gold demand, 1,176 tonnes in 2013, severely understates true non-government gold demand, 2,199 tonnes in 2013, which is only disclosed by the CGA in the China Gold Yearbook 2014 exclusively published in Mandarin hard copies.
This data is not a secret, yet the Chinese have been trying to hide it as much as possible and it looks like either they’re being helped by Western institutions, or these institutions are ignorant.
All Western institutions and press that attended the China Gold Congress have Chinese employees who can perfectly read the China Gold Yearbook 2014. Like I said, why these institutions don’t publish true non-government Chinese gold demand is “a mystery”. I can tell you this though, 99.99 % of the global financial industry uses the Chinese demand numbers from the WGC, which state 2013 demand was 1066 tonnes. From an investment point of view this can give you an advantage.
As always you have to make up your own mind, in this case on Chinese gold demand. Who do you believe? The WGC? Or the China Gold Yearbook 2014 that states total demand was 2,199 tonnes – data that has been confirmed numerous times by the SGE (as I’ve written here and here)?
Every institution or analyst around the world might use a different metric to measure Chinese gold demand, for me the most import facts that stand out are: China net imported more than 1500 tonnes of gold in 2013, mostly 1 Kg bars which we can trace back to Switzerland and the UK, domestic mining production accounted for 428 tonnes, which didn’t leave the mainland as bullion export is prohibited, and all this gold met non-government demand. Additionally, it’s very likely the PBOC imported another few hundred tonnes on top of the 1500 tonnes. Consider this, from The Death Of Money by James Rickards:
A senior manager of G4S, one of the world’s leading secure logistics firms, recently revealed to a gold industry executive that he had personally transported gold into China by land through central Asian mountain passes at the head of a column of People’s Liberation Army tanks and armored transport vehicles. This gold was in the form of the 400-ounce “good delivery” bars favored by central banks rather than the smaller one-kilo bars imported through regular channels and favored by retail investors.
Now please read the translation by my friend Soh Tiong Hum of the Chinese press release on the China Gold Yearbook 2014:
China Becomes World’s Largest Gold Importer At 1507 MT In 2013
September 11 , 2014
Source: China News Network
China News Network, September 11 (Reporter Liu Yuying) – Chinese Gold Yearbook 2014 released by China Gold Association on September 11 shows that in 2013, Chinese gold import grew 197.98%, to 1506.5 tonnes, thereby becoming the world’s largest gold importer.
According to the Almanac, 2013 continues 11 years of growth in China’s gold demand with substantial increase in market volume by 92.65 %. Breaking gold demand of 2012 above 1,000 tonnes, gold demand reached 2198.84 tonnes in 2013, of which consumption increased by 41.36%, consumption volume exceeded 1,000 tons, surpassing India to become the world’s largest gold consumer. Based on this number, net investment is deduced to be 1022.44 tonnes, a substantial increase of 230.68 %.
Over the same period, China’s gold production was 445.4 tonnes. 428.16 tonnes came from domestic sources while 17.25 tonnes came from offshore.
The 2014 almanac says that the increase in Chinese gold demand in 2013 was mainly investment demand, 80% of growth in gold demand came from growth in investment demand.
It is understood that China’s gold supply and demand balance is mainly met through increased imports.
One form of supply is from import of offshore raw materials and finished domestically; the other is direct import of finished ingots.
Commentary in the Yearbook claimed that China’s 2013 gold import nearly doubling is a very big change that has never happened since the founding of China. The reason why China became a destination for foreign gold was mainly because of profit drivers, because there is a premium for RMB gold it is profitable to bring gold to China. As Chinese dependence on foreign gold resources increases, this reality also requires the gold market to open its doors to outsiders.