Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
China Stops Publishing SGE Withdrawal Figures


 -- Published: Tuesday, 26 January 2016 | Print  | Disqus 

By Koos Jansen

https://www.bullionstar.com/

There goes the last bit of transparency in the gold market. Yet, another strong confirmation of the importance of SGE withdrawal figures from the past.

My research into the Chinese gold market started in 2013 when I noted the significance of a number published on a weekly basis in the Chinese Market Data Weekly Reports on the website of the Shanghai Gold Exchange (SGE) regarding the amount of physical gold withdrawn from the vaults. It appeared to me the total amount of gold withdrawn from the SGE vaults on a yearly basis exactly equaled total Chinese gold demand as disclosed in the China Gold Market Report. Consequently, weekly SGE withdrawals served us as an interim indicator for total Chinese (wholesale) gold demand. Subsequently, I started publishing SGE withdrawals every Friday, accompanied with an analysis about the Chinese gold market, which gradually exposed the true size of the Chinese physical gold market. By 2015 the whole gold space was focused on SGE withdrawals!

In addition, genuine Chinese gold demand greatly exceeded Chinese gold demand as reported by the World Gold Council, whose supply and demand data is tracked by most investors around the world. The discrepancy stimulated me to thoroughly investigate the Chinese gold market and SGE withdrawals. Throughout the years all evidence I collected pointed in the same direction; Chinese gold demand is roughly twice as much as what was widely assumed across the globe and SGE withdrawals provide a spy-hole to track the Chinese gold market! However, at the same time my findings were spreading through the gold space the Chinese slowly started to cover their tracks.

Shanghai Gold Exchange SGE withdrawals yearly 2007 2015

The Motive

After the crisis in 2008 it became even more apparent in the higher echelons of the Communist Party that the international fiat monetary system was not sustainable. The development of the Chinese gold market, that has its roots in the late seventies but leaped forward in 2002 when the SGE was erected, had to accelerate to protect the Chinese economy from future turmoil. Being the second largest economy globally but in arrears regarding physical gold reserves – as a result of a closed market since the Communist Party came in power in 1949 – China has a strong motive to buy gold in secret. For, if they would openly buy the volumes they do the gold price would swiftly be affected, damaging China’s window of opportunity in coming on par with Western gold reserves.

And so, the Chinese decided to roll out more measures to hide their insatiable gold demand. On top of being dishonest about their true official gold reserves and eclipsing gold import data in regular customs reports, the Chinese ceased publishing the (English) China Gold Market Reports and SGE Annual Reports – and by 2014 all existing reports were taken offline. The yearly (Chinese) Gold Yearbook by the China Gold Association was no longer digitally published, only in hard copies. When I asked my contact at the SGE last year if I could purchase a copy of the China Gold Market Report I was told, “due to new regulatory measures the reports are not publicly available anymore”. Be aware, in all the aforementioned reports total Chinese gold demand consistently equals SGE withdrawals – confirming the significance of SGE withdrawals – and the reports exactly disclose total Chinese gold import.

SGE Withdrawals Not Disclosed In Most Recent Data

But hiding the reports was not enough for the Chinese gold market architects. Apparently, the publishing of SGE withdrawals had to be discontinued, as it simply attracted too much attention to the true size of the Chinese physical gold market. The (Chinese) Market Data Weekly Reports on the first two trading weeks of 2016 at the SGE listed no withdrawal figures.

In an announcement on the SGE website from 11 January 2016 it stated the giant bourse would henceforth publish its weekly “delivery amount” (total deliveries from both spot deferred products and physical products) and “load-out volume” (withdrawals). Though in week 1 there was no “load-out volume” published and the disclosed “delivery amount” excluded delivery of physical products as I reported last week. The reporting by the SGE in week 1 did not match the announcement.

The 2016 week 2 report is different, now it seems the top left number (247,201.86 Kg) in the overview table indeed resembles total deliveries of all spot deferred products (114,536 Kg) plus total deliveries of all physical products (182,833 Kg). Yet, the sum of both deliveries is 297,359 Kg according to my calculations, not 247,203 Kg. So, I’m probably missing something, in any case SGE withdrawals are not disclosed!

Screen Shot 2016-01-25 at 11.32.10 pm

Overview table 2016 week 2 report. The “delivery amount” is the total amount of gold that has changed ownership in one week. 

Screen Shot 2016-01-17 at 5.49.15 pm

Overview table 2016 week 1 report including translations.

When I called the SGE I was told the “load-out volume” (withdrawals) will not be published anymore, a statement that matches the new reports. This is a disaster for the gold community. SGE withdrawals provided a unique transparent metric for Chinese gold demand and it’s gone. However, the fact the Chinese stopped publishing SGE withdrawals once again strongly confirms the importance of these numbers from the past! Until December 2015 these numbers gave us a direct measure of Chinese wholesale gold demand. The truth became a little uncomfortable for the Chinese.

Ah well, I guess I’ll be focusing more on other gold markets from now on ;-)

Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com


| Digg This Article
 -- Published: Tuesday, 26 January 2016 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.