Shanghai Gold Exchange volume for the week ended July 10, 2015.

The Shanghai Gold Exchange withdrawals were 61.824 tonnes of gold during the week ended July 10, 2015.

Total gold withdrawals on the Shanghai Gold Exchange year to date are about 1,269 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 61.824 tons of gold during the week ended July 10, 2015. The prior week the SGE delivered 44.335 tonnes of gold. The two week total is over 106 tons of gold delivered and the year to date total is over 1,269 tonnes, for an annualized run rate of approximately 2,400 tonnes.

Volume of Gold Withdrawals on the Shanghai Gold Exchange

Withdrawals on the Shanghai Gold Exchange for the week ended July 10, 2015 were over 61 tons-the eight largest amount in any given week since 2009.

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.

Russia, India, Turkey and China are consuming a bulk of the world’s gold as gold heads west to east.

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.

China Updates its Gold Holdings

China recently announced their first update to their official gold holdings since 2009. The People’s Bank of China announced that their gold holdings had climbed from 1054 tonnes to 1658 tonnes, making China the sixth largest gold holding nation in the world.

China’s recent update to its gold holdings put it in fifth place among gold holding nations.

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; more than twenty 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 (106.159 tons) in two weeks is also greater than 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 16, 355 tons of gold have been withdrawn pursuant to this program for an annualized run rate over 1,200 tons of gold a year.

COMEX Hong Kong Gold Kilobar Withdrawals Through July 16, 2015

Comex Hong Kong gold kilo bar withdrawals have been averaging over five tons of gold a day.

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

China and India make up a good portion of global 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:

China is the world’s largest gold producer with mining production over 2,000 tons the past five years.

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.

China imports large amounts of gold through Hong Kong.

All charts, other than the Chinese gold mining production chart, courtesy of Nick Laird.