Shanghai Gold Exchange volume for the week ended July 3, 2015.
The Shanghai Gold Exchange withdrawals were 44.335 tonnes of gold during the week ended July 3, 2015.
Total gold withdrawals on the Shanghai Gold Exchange year to date are about 1,207 tonnes.
Gold withdrawals on the Shanghai Gold Exchange the past two weeks were larger than the amount of gold delivered on COMEX during 2014 and greater than the amount of gold Germany has repatriated from the New York Fed since 2013.
China’s Insatiable Demand for Gold
The Shanghai Gold Exchange (SGE) delivered 44.335 tonnes of gold during the week ended July 3, 2015. The prior week the SGE delivered 46.167 tonnes of gold. The two week total is over 90 tons of gold delivered and the year to date total is over 1,207 tonnes, for an annualized run rate of approximately 2,400 tonnes.
Volume of Gold Withdrawals on the Shanghai Gold Exchange
China is becoming the center of the Asian gold world. A $16 billion China Gold Fund was announced in May and the Shanghai Gold Exchange continues to establish itself as viable competitor to the gold trading centers in London and Chicago. China’s gold imports, trading and mining production are one of the cornerstones of China’s de-dollarization/Yuan strengthening initiatives that focuses no so much on selling U.S. Treasuries but creating alternative financial systems like the Asian Infrastrucure Investment Bank.
China is widely believed to be making a play for inclusion in the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) Program later this year. If China fails to gain inclusion in the SDR, its recent initiatives to strengthen its currency and gain greater acceptance of the Yuan may provide a strong alternative to the IMF regime.
The Bank of China also recently joined the auction process at the London Bullion Market Association where the price of gold is determined.
The volume of gold withdrawn from the Shanghai Gold Exchange dwarves the volume of gold delivered on the COMEX futures gold exchange where most gold futures contracts are not settled by physical delivery of gold.
In 2014, COMEX delivered under 85 tons of gold; about five tons less than the amount that was withdrawn from the Shanghai Gold Exchange during the past two most recently reported weeks!
The volume of gold withdrawn on the SGE (90.502 tons) in two weeks is also equal to the amount of gold that Germany has managed to repatriate from the New York Fed since January 2013 through March 2015 (90 tons).
In addition, the new Chicago Merchatile Exchange futures contract for Hong Kong Kilobars has experienced withdrawls of nearly five tons of gold a day since it began in mid March earlier this year. As of July 1, 324 tons of gold have been withdrawn pursuant to this program for an annualized run rate over 1200 tons of gold a year.
COMEX Hong Kong Gold Kilobar Withdrawals Through June 24, 2015
Along with India, China consumes much of the world’s gold. Depending on any given month, either China or India is the number one gold consumer in the world. Together they account for approximately 3,000 tons a year in gold demand.
China and India Gold Demand
The Bank of China also recently joined the auction process at the London Bullion Market Association where the price of gold is determined.
China is the world’s largest gold producer:
In addition to the vibrant Shanghai Gold Exchange and increasing world leading gold mining production, China is also the world’s largest gold importer. Here is a chart showing the volumes of gold traded on the Shanghai Gold Exchange vs. gold imported through Hong Kong as of April 2015.
All charts, other than the Chinese gold mining production chart, courtesy of Nick Laird.