Koos Jansen
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Koos Jansen
Posted on 4 Jan 2014 by

Unprecedented Total Chinese Gold Demand 2013

Friday the numbers were released on total Chinese gold demand for 2013. Total demand can be measured by the amount of physical gold that is withdrawn from the vaults of the Shanghai Gold Exchange. In the last full trading week (#52, December 23 – 27) of 2013 there were 53 tons of physical gold withdrawn, which brings the yearly total to 2181 tons. Yes, total Chinese demand for 2013 was 2181 tons, excluding PBOC purchases. All my sources in the mainland state the PBOC would never buy its gold through the SGE, so total demand including PBOC purchases may have reached well over 2500 tons.  Which would imply total net import was 2000 tons (as I have written extensively about here).

Since November demand for physical gold has surged, weekly withdrawals have been above average, transcending weekly global mine production. Not only did we observe strong demand at the SGE, it was also perceived in an incredible shopping spree at jewelry shops around new year. From Want China Times:

….Many Chinese gold buyers have been happy to see the price drop as this is traditionally peak season for gold purchases before the Lunar New Year holiday and the recent slump will allow them to buy gold at relatively low prices.

“It is a good deal. It can be seen as an investment when gold prices go up in the future,” a customer said. 

The sales had surged by at least 20% in December 2013 from a month earlier and were up by 15%, compared with the same period in 2012.

Of the sold items, products related to the upcoming Year of Horse were the most sought after in stores.


Beijing gold rush, Chinese gold demand 2013
January 1, 2014 Beijing
Beijing gold rush 3, Chinese gold demand 2013
January 1, 2014 Ningbo, Zhejiang
Beijing gold rush january 2014, Chinese gold demand 2013
January 1, 2014 Beijing


Throughout week 52 GOFO has remained negative in London, GLD lost 4.5 tons and on the Shanghai Gold Exchange premiums increased to 2 %.

GOFO july december 2013

Overview Shanghai Gold Exchange data week 52

– 53 metric tonnes withdrawn from the SGE vaults in week 52 (23-12-2013/27-12-2013)

– w/w  – 3.95 %

– 2181 metric tonnes withdrawn in 2013
– weekly average 41.94 tonnes in 2013


For more information on SGE withdrawals read thisthisthis and this.

SGE weekly gold withdrawals week 52 2013, Chinese gold demand 2013

This is a screen dump from 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.

Shanghai Gold Exchange gold withdrawals week 52 2013, Chinese gold demand 2013

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).

SGE premiums week 52

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.

Shanghai Gold Exchange gold premiums week 52 2013

Overview Chinese Gold Demand 2013

2013 has been a spectacular year wherein the pice of gold fell 29 %, but Chinese gold demand has been unprecedented and may have reached, PBOC purchases included, over 2500 tons. Exposing a disparity between the gold price set by derivatives and supply and demand for the underlying good. The divergence strongly hints at price manipulation, of which the Chinese would have been the largest beneficiaries. China has $3.5 trillion in foreign exchange (of which at least 1.7 trillion denominated in USD) and is aware the US is forced to devalue their currency; evaporating China’s reserves. For this reason China has a strong incentive to diversify away from the USD into gold. Hence the enormous physical gold purchases in 2013.

SGE yearly vs COMEX 2006 2013

In January 2013 USGS forecasted global mining production would be 2700 tons for the year, but due to the drop in the gold price this may turn out significantly lower as mines were forced to shut down.

A lot of the gold sold on the SGE was sourced via Hong Kong and Switzerland from the UK. The trade numbers from these countries from the last months haven’t been published yet, though in the first ten months of 2013 the UK has net exported 1199 tons (annualized 1439 tons) to Switzerland, Switzerland has net exported 779 tons (annualized 935 tons) to Hong Kong, and Hong Kong has net exported 957 tons (annualized 1148 tons) to the mainland. Hong Kong itself net imported 510 tons of gold over this period, annualized 612 tons. The UK’s primary seller was the world’s largest ETF holding GLD, whose inventory dropped by 551,7 tons.

GLD 12 2013, Chinese gold demand 2013

UK Gold Trade 2008-2013 10-13

Switzerland Gold Trade 2013-Q3

HK Swiss gold trade 10-2013, Chinese gold demand 2013

Hong Kong - China gold trade 10-2013, Chinese gold demand 2013

HK + China net inflow 10-2013, Chinese gold demand 2013

2014 will be an exciting year; Chinese gold demand is not likely to slow down but supply is running dry. By the way, the rest of the world will also demand gold as all developed economies in recent years have been kept alive by the printing press, whereby the price mechanism is completely destroyed, a path of no return nor good outcome. Stretching the end of the global fiat experiment.

Koos Jansen
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  • LV

    Congratulations on your work.
    Maybe You just heard the piece, but it´s important to the work You do. It´s a interview with Albert Cheng (podcast at McAlvany.com).
    All the best to the high-minded people like You that are trying to shed light to an important market as Gold (and pm in general) really is.

  • golden_times

    Outstanding research work and info – Big thx & keep going!!

    • In Gold We Trust

      Please donate to help me continue my work!

      • In Gold We Trust

        Thanks to the ones that did!! 🙂

  • Gutekunst

    In 2013 China took all the ETF Gold, which was sold. If China continues bying at the same speed, where will all the physical Gold come from in 2014? I assume the remaining TF Holders are more long term investors, the speculative money has left the ETFs and is playing Gold more from the short side. We won´t see the same amout of physical coming out of the ETFs like in 2013.

  • Goldbugger

    Does the 2500 tons include gold mined in CHina and kept there without entering the markets?

  • Gutekunst

    If you think that Koos does outstanding work, please donate. Every dollar helps to continue his work.

    I have donated because I would miss his blog. His blog is one of the few blogs which really deals with facts and not with stories.

    • In Gold We Trust

      Thanks for appreciating my work. I’m glad people like it.

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