Koos Jansen
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Koos Jansen
Posted on 19 Feb 2014 by

The World Gold Council Clueless on Chinese Gold Demand?

February 18, 2014 the World Gold Council released the Gold Demand Trends for 2013. According to this report total 2013 Chinese consumer demand was 1,065.8 tons. In my opinion this number is highly disputable.

Chinese Gold Market Essentials

The Chinese gold market is completely structured top down. The main physical (spot and deferred) exchange in China is the Shanghai Gold Exchange (SGE), that serves as the entrance point for imported and mined gold to the Chinese marketplace. Additionally the SGE is supplied by recycled gold. The Shanghai Futures Exchange (SHFE) facilitates the trading of gold futures contracts (to compete with the pricing power of Western markets).

The reason the PBOC requires imported gold to be sold first through the SGE (mined and recycled gold are stimulated to be sold through the SGE by tax incentives) is to keep track of how much gold is added to non-government reserves (jewelry, bar hoarding, etc). The setup is quite simple; to channel import and mine supply through one exchange the PBOC can efficiently supervise the quality and quantity of the gold that enters the Chinese market place. The PBOC likes to knows how many grains of fine gold are being held among the people.

Before gold is allowed to enter the vaults of the SGE it’s assayed by the National Quality Supervision and Inspection Center for Bullion & Its Products that grants a minimum fineness of 99.95. Gold withdrawn from the SGE vaults can only re-enter as recycled gold. After being remelted, by one of the associated refineries (see the list on page 40), and an assaying process the gold can move back into the SGE vaults. Just to make sure on SGE level gold of the highest purity is traded.

SGE

The consequence/purpose of the structure of the Chinese gold market is that SGE withdrawals equal wholesale demand. Confirmed by the fact that total demand reported by the China Gold Market Reports 2007 – 2011 exactly equal SGE withdrawals for the corresponding years. For an extensive analysis read this.

The Great Disparity

In 2013 SGE withdrawals accounted for 2197 tons. The next screen dump is from the last SGE report of 2013, the second number from the right (red – 本年累计交割量) is the total amount of gold withdrawn from the SGE vaults in Kg.

SGE total withdrawals 2013

The World Gold Council (WGC) claims to report on ALL sorts of demand; consumer, investment, industrial and central bank demand. This is from their February 18, 2014 press release:

Global consumer demand for gold at unprecedented levels in 2013 China the world’s largest gold market in 2013 

Consumers around the world bought gold in record amounts in 2013, led by demand in China and India, with China becoming the world’s biggest gold market, according to the latest World Gold Council Gold Demand Trends report. …

In 2013 the gold market saw 21% growth in demand from consumers which contrasted with outflows of 881t from ETFs. The net result was that global gold demand in 2013 was 15% lower than in 2012, with a full year total of 3,756t. …

Central banks

Although down 32% on 2012 they continued to be strong buyers of gold, a trend which began in 2009. 2013 saw net purchases in all four quarters, totalling 369t, meaning 12 consecutive quarters of net inflows. …

Technology

Demand reached 405t in 2013, virtually unchanged from the figure of 407t in 2012.

We can see the WGC tracks consumer (jewelry, bar and coin), ETF (and thus investment funds), central bank and industrial demand. Logic, if one wants to thoroughly analyze the gold market all facets of supply and demand must be taken into account.

So how come there is such a big difference between Chinese demand reported by the WGC, 1066 tons, and wholesale demand, 2197 tons? Why is the WGC missing 1132 tons? One reason is because the Chinese are hiding it. Since 2008 the Chinese have great interest to hoard in the dark in order to diversify their US dollar reserves, strengthen their economy and protect it from external shocks. The China Gold Association (CGA) changed the way they measure demand and all other Chinese gold institutions ceased publishing reports on demand since 2011. The only valuable information they continue to publish are SGE withdrawals. Not often, but sometimes the facts seep through the Chinese press:

China’s explosion in demand for physical gold in 2013 left a deep impression on international investors. The Shanghai Gold Exchange withdrawals for the year up till 27 December 2013 exceeded 2180 tons. Considering the exchange’s position as a hub for domestic gold circulation, in conjunction with a system that forbids withdrawn gold from re-entering inventory, to a large extent the withdrawals number can be treated as the best benchmark for physical gold demand in the Chinese market.  Not to mention that the entire 2013 global mined gold production does not exceed 2700 tons. China’s massive demand has to a large extent remade the world’s gold circulation system. Newly mined and stocked gold is moving through trade links in London – Switzerland – Hong Kong – into China in a large scale orientation towards the East. The impact of China’s demand on international gold price will inevitably increase.

Why consumer demand as presented to the world has been understated since 2008 is because the China Gold Association is manipulating the demand category net investment to suppress other categories like jewelry and bar.  This is an overview from the China Gold Market Report 2010.

Chinese gold demand 2010

According to the China Gold Market Report 2007 net investment was 18 tons. Thomson Reuters GFMS (which is the sole data provider for the WGC), assumed this was gold added to the stocks of banks, jewelers and the mint, as it was withdrawn from the SGE vaults but wasn’t sold on retail level. In 2007 this was probably true. But when Lehman fell the world changed, the Chinese began to overstate net investment to hide true demand. Up until today GFMS states net investment is stock movement changeLet’s have a look at how much net investment was in recent years. Note, in the chart below the “Difference” is approximately net investment, calculated as SGE withdrawals minus WGC consumer demand minus industrial demand.

SGE withdrawals vs WGC

Actual net investment published by the China Gold Market Reports: 2007 – 18 tons, 2008 – 129 tons, 2009 – 147 tons, 2010 – 266 tons, 2011 – 285 tons.

From 2007 – 2013 net investment was roughly 2000 tons. This definitely can not have been stock movement change at banks, jewelers and the mint. According to my analysis this gold was bought at the SGE by investment funds, individual investors and jewelers pretending to be individual investors. In the mainland there is 17 % VAT on jewelry, plus an additional 5 % consumption tax – you do the math.

WGC gold

I contacted the WGC and got in touch with one of their experts based in China. When I asked him what net investment was we had a brief debate after which he had to admit he was clueless on where this gold was going. He told me the Chinese will never disclose this information. I asked him if he would like to collaborate with me to research net investment. I got no response. A week later I asked him if he would grant me permission to publish our email correspondence. He responded to not publish our correspondence as it was meant to be private.

gfms

In the meantime I was emailing a precious metals analyst from Thomson Reuters GFMS about the Turkish gold market. This gentleman was extremely kind and helpful and explained to me in detail how GFMS measures Turkish gold coin production. Very valuable information for me! When I asked him what his take was on Chinese net investment, I got no response.

CPM Group

Jeff Christian from CPM Group did respond after I wrote him an open letter regarding SGE withdrawals. You can read our debate in the comment section of this post. Not surprisingly we couldn’t agree. What was interesting about our conversation was that he said total Chinese net gold import in 2013 was 1411 tons.

CGA

Of course I’ve written a million emails to the CGA, in English and Chinese, no response whatsoever. I called them speaking English, no luck. My friend in the mainland has called them numerous times, they always say the gentleman who wrote the China Gold Market Reports is on holiday. The message is clear…

The mainland officially net imported 1158 tons of gold from Hong Kong in 2013. Total net import according to Jeffrey Christian was 1411 tons (according to me it was 2000 tons), let’s take his number for an example. How can China import 1411 tons and mine 428 tons (that’s 1839 tons) but only demand 1066 tons? Did they import gold without asking for it? Did someone secretly pushed it across the border and now the Chinese are stuck with it? Or is there a lot of demand the WGC doesn’t disclose?

Anyway, I think 1066 tons Chinese consumer demand as reported by the WGC is highly underestimated. To be continued…

Koos Jansen
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  • Hugh

    Another big wild card in all of this is how much gold entering China is actually destined for India via smuggling. Indian demand is unstoppable for cultural reasons.

    • Sven

      Isn’t gold smuggled into India coming from Dubai?

      • Hugh

        Sure it’s coming from Dubai but China shares a border with China and it seems to me to be an obvious low cost overland route for smuggling. Why wouldn’t this be a route with all the gold that’s going into China?

        • Any Old Irony

          The Himalayas

          Next question please

          • goldstube24

            Take the route through Kathmandu.
            China -> Kathmandu (Nepal) -> India.

            OK, you may have to pay bribes 2 times ;)

          • Uncensored Comments

            Truck transport, within India, has no more, and no less, difficulties than domestic Indian trucking; long sections of congested roads in poor condition, delays at state border crossings, etc.

            Unfortunately, most of the main bilateral trade routes pass through Bihar, where state check posts may take up to eight hours to negotiate and many roads are in such poor condition that speeds are
            reduced to 20 kph. For example, the trucks carrying third – country cargo from kolkata/Haldia port take four days to reach ICD Birgunj in Nepal http://mpra.ub.uni-muenchen.de/4587//MPRA_paper_45874.pdf

            The north-south highways in Nepal are connected to the Indian border and serve the bilateral as well as third country trade. However, there are deficiencies in terms of feeder roads, bridges and transshipment facilities at the border crossing. The slower speeds
            caused by the poor road conditions and breakdowns of vehicles are also seen as the contributing factors to the pilferage and theft that takes along the transit route. Similarly, the road linkage to Nepal-China border is through the 110 km long Araniko highway that connects Kathmandu to the border town of Zhamu of Tibet. The second highway linkage to Nepal China border is being developed by connecting a missing link of 22 kms between Rasuwagarhi and Syabrubesin North West of Kathmandu.

            http://www.unescap.org/tid/artnet/mtg/tfri_s3ojha.pdf

            Perhaps, given that both India and China have highly capable Space Programmes and Submarine Fleets, smuggling would be easier in Orbit around Uranus or deep under the South China Sea. Other than that, I’m afraid you and your 30 years experience in PM’s are just going to have to keep on dreaming

          • Uncensored Comments

            Opinionated Germans clueless on Asian Logistics

            China is the biggest supplier of Nepal, but most commercial shipment from China to Nepal are via Calcutta India.It is because road transportation from China directly to Nepal is not so efficient.

            http://dslyw.com/index.files/n

            http://en.dslyw.com/nepal.html

            “Truck transport, within India, has no more, and no less, difficulties than domestic Indian trucking; long sections of congested roads in poor condition, delays at state border crossings, etc.

            Unfortunately, most of the main bilateral trade routes pass
            through Bihar, where state check posts may take up to eight hours to
            negotiate and many roads are in such poor condition that speeds are reduced to 20 kph. For example, the trucks carrying third – country cargo from kolkata/Haldia port take four days to reach ICD Birgunj in Nepal”

            http://mpra.ub.uni-muenchen.de

            “The north-south highways in Nepal are connected to the Indian
            border and serve the bilateral as well as third country trade. However,
            there are deficiencies in terms of feeder roads, bridges and
            transshipment facilities at the border crossing. The slower speeds
            caused by the poor road conditions and breakdowns of vehicles are also seen as the contributing factors to the pilferage and theft that takes along the transit route.

            Similarly, the road linkage to Nepal-China border is through
            the 110 km long Araniko highway that connects Kathmandu to the border town of Zhamu of Tibet. The second highway linkage to Nepal China border is being developed by connecting a missing link of 22 kmsbetween Rasuwagarhi and Syabrubesin North West of Kathmandu.”

            http://www.unescap.org/tid/art

            Perhaps, given that both India and China have highly capable Space
            Programmes and Submarine Fleets, smuggling would be easier in orbit
            around Uranus or deep under the Polar Ice Caps?

            Other than that, I’m afraid you and your 30 years experience in PM’s are just going to have to keep on dreaming

    • XC Skater

      I also wonder why we would obcess over number of gold entering China.
      If we hear reports that Swiss refiners are running 24/7 to meet demand off gold, would that not be more capacity that we see entering China? How easily China could set up a vaulting facility in CH or Germany. To have to their disposal, but not in their figures. So much easier than smuggling. Send a few trusted soldiers there to oversee operations.

  • Matt

    The WGC also has a 300t stock build figure for China, and says it doesn’t know about CBs. So its figure is somewhat higher than the 1,066t you quote.

    • In Gold We Trust

      Thanks I will look into it.

      • In Gold We Trust

        Which part of the WGC gold demand trends report do you refer to? This one? My opinion is 2000 tons of stock is not negligible. Btw, a jeweler that buys gold for inventory isn’t demand?

        • Matt

          I don’t know if it’s in the report, its comments by WGC staff. A jeweller that buys gold for inventory is not counted as demand in the WGC report except where they show a S&D balance where it is called ‘OTC investment and stock changes’, and from memory was 370t or so in 4Q and 580t or so for full year.

          • In Gold We Trust

            1) That’s why I call SGE withdrawals wholesale demand.
            2) Are those numbers on China or global?

          • matt

            Global, but one would assume mostly in China.

  • Zhanglan

    Koos, every day I read utter lies and nonsense – about China, about Gold, about the effects of Winter weather on the US Economy, about the fact that QE tapering is negative for Gold, about how the Gold : Silver ratioo has hostorically averaged 15, about how a rising stock market is bad for Gold, about how crises in Emerging Markets currencies are bad for Gold – and today I even read that investment demand for Gold was down 50% in 2013 (and that’s why the price fell) http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=229498&sn=Detail and according to the World Gold Council the increase in OTC demand “was primarily due to a build up of stockpiles in Q4 by wholesalers and fabricators in Asia”.

    It’s all total and utter lies – lies by the media (Bloomberg in particular), lies by the Government, lies by the Gold Bugs. And none of it matters:

    1. Even if you are right that Chinese gold demand totalled over 2,000 tons in 2013, it didnt stop the Gold price falling because

    2. Unless you are Germany, 1000 tons or 2000 tons is a tiny amount of Gold compared to the estimated 170,000 tons of above-ground stocks and the [Insert Improbably High Number Here] volume traded daily on the LBMA and elsewhere

    3. Even if we knew the precise amount of Gold imported, exported, lost down the back of sofas and turned into gold-plated dildos in China, so what? The underlying truth is that China is an emerging economic power – that’s why the Western media has to keep claiming that its about to collapse every day – its middle class has an exponentially increasing disposable income and isnt afraid to use it, and the West is economically dead in the water. Let them lie about it – its not going to change anything

    What we need is to look beyond the gaming, the ignorance and the tribalism which typifies what passes for analysis of the Gold market, look beyond the geopolitics and the spin, and focus on what all of this is actually telling us:

    a. Something is badly wrong with the financial markets in the West, and the pivot of economic activity is shifting eastwards

    b. It is readily apparent that Gold remains a significant a component of the global financial system, but that cultural attitudes towards it vary, and politicians are acutely aware of the emotional and psychological impact which news about Gold has on their serfs populations

    c. As a price-related investment, Gold offers no greater chance of a profitable outcome over any given time period than a Casino (and the odds are similarly stacked), but as a store of value it is unsurpassed. Check out the http://www.pricedingold.com charts and tell me it ain’t so – since the Dotocom bust, since Lehmans, since Taper was announced and since the New Year, Gold has been the leading performer amongst mainstream asset classes

    The world is full of snake-oil salesmen trying to peddle magical trading strategies, newsletters, worthless novelty silver buttons, and their troupes of camp following doomsayers, fanbois and self-styled prophets – and it has always been so. On the other side we have amoral and unprincipled financiers, corrupt politicians and predatory commercial interests, lying through the teeth of sycophatic and compliant media whilst a largely apathetic and dumbed-down populace gorges itself on Next American Idol aand Britain’s Got Talent

    Your challenge – our challenge – is to rise above it, navigate a way through it, and focus on the important things in life. Whether it was 1000 tons or 2000 tons is immaterial – and even of you proved that you were correct, some muppet would simply dismiss all Chinese statistics as bogus, and if they weren’t Chinese, would simply claim that the charts were “made up” and that prices never actually traded at those levels. People will believe what they have been conditioned to bellieve – leave them to it

    Keep up the good work; you surely realise now that you are widely respected and your pioneering research is respected by a very large number of people; don’t fall into the Bron – Kid Dynamo – Trader Dan – Turd Ferguson – Andrew Maguire “he said / she said” catfight – just keep on telling it how you see it an ignore the backchat. There’s far more to life than “being right”

    • Wil Martindale

      Quite so good Sir, I think the essential question here is whether the WGC is clueless or compromised (no Cubano for guessing the later). There will be a great many surprises about who holds what when the music stops, and the dollar faction has the band playing on a Keynesian cocaine drip which cannot last indefinately. I quite suspect that this marathon is about to end … as the Roacheforque says, tradition is about to reclaim its namesake.

      http://roacheforque.blogspot.com/

    • rowingboat

      15 years in the gold market, and yours is one of the best essays I have read. Very rare and balanced views Zhanglan, great level headed commentary! I too am attracted by the purity and honesty of Koos’ data.

  • juxx0r

    Hi Koos, thanks for the great article.

    Can you please define for us what “Negative Demand” is as described in the chart on page 1 of the WGC release and on Table 6 of the same release?

    • In Gold We Trust

      Supply?

      • juxx0r

        That’s what i thought. So if you move the -880.8t from column 2 of Table 6 into the supply part of the table, Then what you’d have is record demand of over 5,200t not a reduction in demand of 15%.

        I don’t think the word gold cronies understand their job properly.

  • rowingboat

    Actually I think there’s a lot of common ground between you and Christian. Take his 1411 t imports add 428 t mine supply and your estimate of 300t recycled = 2139t. This is pretty darned close to SGE deliveries of 2197t last yr.

    WGC is measuring consumer demand but considering the top few % of people own most the wealth, then the discrepancy could be explained by rich investors taking delivery from SGE as well as investment/sovereign wealth funds. How could WGC/GFMS ever measure that?

    So globally they’re approaching this bottom up for items they’re able to measure and lumping together everything else that they can’t at the bottom to make their supply/demand data balance. The more useful way is top-down analysis, I agree… net 1700 t into HK/mainland China, 2000 t out of UK, 500 t out of America, 300 t net into Switzerland etc. These are the big money flows determining price that are invisible or hidden in the WGC data, and who net them out in the residual line at the bottom (595 tonne).

    I’d like to see data/estimates of how the world’s 170,000 t bullion is distributed across the planet. Use that as a starting point then track import/export data of major nations.

    • In Gold We Trust

      We may agree on the supply side, let’s see if we agree on the demand side.

      Very simple, they could measure it the same way I did.

      2000 tons out of UK?

      • rowingboat

        WGC can’t measure it the same way you do because China is unique… what other country provides delivery data like SGE does? What if China stops providing this single data point?

        From WGC’s point of view China needs to fit within their ‘model’ and data collection of the global market. And yes it is flawed as your data highlight. Think about it, what if this reverses? What if big Chinese investors needed to sell in a credit crunch or switched into the equities market? How would the figures manifest themselves? Undoubtedly it would show up in the import data. Precisely what has happened in the West… imports reducing flipping into exports. WGC has no way of measuring their big-money outflows, just like they can’t measure big money inflows into China.

        Regarding UK, I was recollecting your own data from memory. Eye-balling it again maybe 2000 gross in 2013, 1500 tonnes net exports it looks like. I should have wrote 1500t for UK, my error. Cheers.

        • Salacious Monk

          What if big investors in the west have hardly been selling their gold and some even want to buy some more physical? And it is the gold in the Fed’s and BoE’s vaults that have been dumped into the western market? What if the central bank gold is more than enough to satisfy the demand for physical in the west and the surplus has been going to China? Maybe this is another way to interpret the gold import and export data in the western world. Imports reducing flipping into exports.

          • rowingboat

            Yes, that’s similar to GATA’s thesis isn’t it? From memory 25% gone 1998, 50% around 2004 and now Sprott suggesting 100% or close to it. I’m sure CBs will be blamed for many more years yet, even though proportionally their influence reduces each year. Unless Sprott is right of course! However, I suggest it’s mainly collective Western investment over many years followed by divestment in very short order, based on perceptions of economic outlook. If those perceptions change again, it will get very interesting just the same.

  • Chris

    Increases in US Treasury debt by “foreigners” have been astounding since ’00 and particularly since the GFC…allowing continued US deficit spending w/ ever lower rates on this ever larger debt. Now, as the Fed “tapers” it’s QE, “foreigners” are increasing their buying helping the US avoid an interest rate shock. As you gander @ the below increases attributed to “foreign” nations, consider why would “foreigners” buy something @ extremely low yields, sure to be a loser to inflation, and ties them further to a dollar system they are attempting to become less reliant upon???

    Individual country / regional increases (as “assigned” by TIC. below TIC data based on where these are bought / held, not nationality of buyer),

    Global
    Jan ’00 —> ’07 —> Dec ’13:

    $1 T —> $1.6 T —> $5.6 T

    ASIA
    China $60 B —> $400 B —> $1.27 T
    Japan $315 B —> $600 B —> $1.18 T
    Taiwan $35 B —> $38 B —> $182 B
    HK $39 B —> $52 B —> $159 B
    Singapore $30 B-> $30 B —> $86 B
    India $15 B —> $69 B
    Thailand $13 B -> $16 B —> $52 B
    TOTAL $497 $3 T (600% increase, ’00-’13)

    AMERICAS
    Brazil $54 B —> $245 B
    Canada $15 B —> $28 B —> $56 B
    “Carribean banking centers”
    $ 35 B —> $68 B —> $291 B
    TOTAL $55 B $592 B (1100% increase)

    MENA
    “oil exporters”
    $45 B —> $112 B —> $238 B (500% increase)

    EUROPE
    Russia $9 B —> $139 B
    Norway $20 B —> $97 B
    UK $50 B —> $100 B —> $164 B
    Switzerland $18 B> $34 B —> $175 B
    Turkey $25 B —> $52 B
    TOTAL $83 B $627 B (750% increase)

    BANKING EURO
    Ireland $5 B —> $19 B —> $125 B
    Belgium $28 B –> $13 B —> $257 B
    Luxemburg $60 B –> $134 B
    TOTAL $38 B $516 B (1350% increase)

    CORE EURO
    Germany $54 B —> $50 B —> $67 B
    Italy $20 B —> $14 B —> $30 B
    Netherland $13 B-> $15 B —> $37 B
    France $27 B —> $10 B —> $54 B
    Spain $20 B —> $ $23 B
    TOTAL $134 B $211 B (57% increase)

    I wonder who really owns all these T’s…”foreigners” is simply the term TIC applies to Treasury’s purchased / held in “overseas custody accts”…the data is provided by US based “custodians”…data “may not be attributed to actual owners”…”data may not provide “precise” acct’ing”…
    (see TIC FAQ #7 at: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticf…).

    I have a sneaking suspicion that debt ravaged Ireland did not buy $106 B in Treasuries since ’08. And Norway did not add $77 B, nor did Belgium add $244 B since ’08…and on and on. I don’t doubt the Treasury’s were purchased…I simply doubt where the money came from.

    I have a funny feeling there is a shadow QE at least as large as the on the books QE and maybe this shadow QE is double the size of “QE”. Whether this is via currency swaps, ESF, Fed authorized agents, or whatever manner…there are likely many more dollars than acknowledged…in essence in a gigantic Fed induced counterfeiting ring to maintain a “market” for US treasury debt @ ever lower yields.

    All these likely fraudulent dollars, declining cheap energy, and low inventory vs. high demand for PM’s may have some price implications for silver and gold. And these ingredients are coming together now in a perfect storm.

  • Uncensored Comments

    I am going to circulate an entirely bogus rumour about the reasons underlying the difference between Koos’s SGE figures and those published by the WGC; my sole intention in doing so is to see how long it takes to become Common Knowledge and appears in other articles about Gold on other websites

    It goes like this; as we know, Everything in China is faked and copied. The statistics, iPhones, even Ai Wei Wei’s design studio is called The Fake Art Company or something like that. Well, here we go

    1. The standard approved test equipment used by Chinese assayers is the MFD800C http://i01.i.aliimg.com/wsphoto/v1/555698775/NEW-MFD800C-font-b-Ultrasonic-b-font-Flaw-Detector-Tester-Meter-with-BNC-Connector.jpg which is an ultrasonic device capable of penetrating 50/1000th of a cm into the surface of a Gold bar, and returning a spectral analysis of its precious metal content which is accurate to 2 decimal places (i.e. 99.99%) As you can see, it is an expensive piece of kit with an impressive specificationhttp://www.aliexpress.com/item/NEW-MFD800C-Ultrasonic-Flaw-Detector/555698775.html

    2. However, realising the limitations of this approach, for a number of years now, Chinese imprters have been systematically melting down LMBA 400 oz Good Delivery Bars, and re-casting them as 1Kg bars comprised of a 500 gramme Tungsten core surrounded by a 100/1000th cm thick layer of 999.9 Gold. This is of course twice as deep as the MFD800C can penetrate, and the fraud is therefore impossible to detect

    3. Some of these bars are made for export overseas on e.g. Ebay, where they are described as “Layered 100 mills”, with the “mills” of course referring to the 100/1000th Gold cladding: here is an example – http://www.ebay.com/itm/1-oz-GOLD-BUFFALO-BAR-100-MILLS-RARE-NEW-/301091129142 but the majority are flooded directly onto the Shanghai Gold Exchange http://i.ebayimg.com/00/s/MTYwMFgxNTgx/$T2eC16JHJHIE9nysd6lWBQ+cS4jDQw~~60_12.JPG

    http://www.ebay.com/itm/1-oz-BANK-OF-CHINA-24k-GOLD-DRAGON-BULLION-BAR-999-/251456688441?pt=UK_Coins_Bullion_Bars_SM&hash=item3a8bfc9139 where they are delivered in double-quick time to unsuspecting Chinese peasant farmers who are stocking up in anticipation of the imminent social unrest and counter-revolutionary democratic ‘Jasmine Spring’ rebellion which is sure to kick off just as soon as HSBC’s Flash PMI figures are released, the air pollution gets worse in Beijing and the Dalai Lama announces that he’s gone long Twitter stock. We know this because the CIA told us.

    4. As a consequence, whilst Koos’ SGE figures are undoubtedly accurate from a weight perspective, actually only 1/2 that amount of Gold metal was actually delivered – in fact, in some areas of China there are now vast deserted Ghost Cities made entirely out of discarded Tungsten ingots, which, despite their conspicuous weight, nonetheless form into ‘bubbles’ inside the shadowy Shadow Banks and will undoubtedly one day prove to be a millstone around China’s. neck. Perhaps tomorrow, hopefully. If not, then definitely the day after, because China is basically bust and up to its neck in debt and, anyhow, they’re all basically Commies and remember Tiananmen Square and, well, you get the idea

    5. Although this proposed rumour may sound fanciful, and unlikely to convince many people at first flush, I have come up with a cunning back-story to win over the hearts and minds of readers to King World News and Turd Ferguson’s ‘Island of Misfit Toys’ website, and it goes like this – because only HALF the amount of Gold is actually being delivered, but the Chinese are still willing to pay full price for it, then that is surely just proof of how strong demand is in Asia – people are clearly willing to pay a 100% premium over the (manipulated! Boo! Hiss!) spot price, and this is clear evidence that COMEX is going to default soon, Silver is going to be more valuable than Gold, and that drinking your own urine helps defend the Homeland against alien invasion by Russian zombies already stationed in Canada. This will be a dream come true for such fantasists, and the less plausible and further from the truth the rumour gets, the more they will lap it up and regurgitate it as the Gospel Truth

    So, there you have it, Koos – all neatly explained. Both you AND the WGC are correct, and its all down to a substandard Chinese ultrasonic machine – like, duhhhh, isn’t all their electronic equipment rubbish? I had a Chinese Wok once and the first time I used it I couldn’t even get it to toast bread evenly on both sides! Rubbish!

    Please spread the word: in Chinese, Tungsten is 钨 – pronounced “Wu” – and that’s also the sound Chinese peasant farmers make when they realise they have been duped into buying Turd Ferguson silver rounds worthless Gold-plated bricks

    • goldstube24

      Sorry to say that your claims about ultrasonic flaw detector MFD800C are incorrect (someone impolite person might say: utter BS ;).

      You are claiming that

      “unscrupulous Chinese bullion dealers have been systematically melting
      down LMBA 400 oz Good Delivery Bars, and re-casting them as 1Kg bars
      comprised of a 500 gramme Tungsten core surrounded by a 100/1000th cm
      thick layer of 999.9 Gold. This is of course twice as deep as the
      MFD800C can penetrate, and the fraud is therefore impossible to detect”

      MFD800C has a range of 9999 mm in steel (using the right high range ultrasonic sensor).

      MFD800C specs can be found at the Mitech home page:
      http://www.mitechworld.com/ProDetail_149.aspx

      So you can imagine that MFD800C is able to penetrate the full thickness of a 400 oz bar for inserts. If you are really kinky, you even could check a 400 oz bar from front ot back.
      (400 oz gold bar dimensions: length = 200 mm, width = 80 mm, height = 45 mm ).

      If someone is posting such utter nonsense about ultrasonic testing, his other claims are becoming moot.

      Why I know? Because I’m trading (and checking) PMs for more than 30 years now.

      Sorry, but this had to be said…

      • Zhanglan

        Goldstube 24- he began by saying that he was intending to create an entirely bogus rumour with the sole intention of seeing how long it would be before a supposed professional took his deliberately bullshit story seriously

        He didn’t have to wait long, apparently

        • Uncensored Comments

          Actually, I was also joking about the mountains of unwanted Tungsten and their apparently ludicrous non-connection to Ghost Cities, and in turn their totally non-existent connection to the shadow Shadow Banking system.

          Then this article came out: http://www.zerohedge.com/news/2014-02-21/china-faces-vicious-circle-commodity-collateral-collapses and what was intended as an ironic parody came true

          You couldn’t make this bullshit up; but Bloomberg does, and I bow my head in deep and genuine respect to the undisputed Masters of the emerging science of DLS (Drivel, Lies & Spin)

          If this is what passes for sanity in the mainstream media, maybe being a refugee from the Real World washed up on the shores of Turdville Island is not such a dismal option after all; Lord knows, the Rednecks seem to feel at home there

        • goldstube24

          Ooops. Reading the posting using my smartphone, I blinked the “bogus” part. Sorry.

      • Angular Miracle

        Another welcome visitor from Turdvillehttps://www.google.co.uk/url?sa=t&source=web&rct=j&ei=5icIU86JNMGzrgfJ8oHICA&url=http://www.youtube.com/watch%3Fv%3DGr6GbKciNCY&cd=1&ved=0CC4QtwIwAA&usg=AFQjCNFPuCedTyi4LudkYkLDXaqVZCSJEw

  • XC Skater

    Koos, it reads to the layman as if you try and interpret and contest the given consumer demand figure as total demand figure. Why could consumer demand not be total – central+corporate = consumer? What am I missing here?

    Groetjes uit Rotterdam,

    J

  • http://PeterPalms.com/capital peterpalms

    Who is buying all the gold and from where

    Interview with Koos Jansen

    http://kirillklip.blogspot.co.uk/2014/10/turd-ferguson-interviews-koos-jansen-in.html

    What is really happening in Gold. One hour interview Interview with by Dutch analyst Koos Jansen consultant to Chinese Govt.
    Gold cannot enter China until it is reasayed.to 99.95 purity
    Chin expected to have 4000 tons of gold
    Swiss Voter chose return to gold backed currency and by 1500 tons 30%b backing

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