The Shanghai Gold Exchange Reports over 1,555 Tons of Gold Withdrawn through September.
While western volumes of gold trading and ETF outflows have fallen over the past 18 months, the Shanghai gold exchange has consistently driven higher average volumes. Gold withdrawals on the Shanghai Gold Exchange were 188.8 tons in September about the same as August when 190 tons were withdrawn.
During the first nine months of 2018, 1,555 tons of gold have been withdrawn. Shanghai Gold Exchange withdrawals through September 2018 are on the third strongest pace since the Shanghai Gold Exchange began trading in 2008.
The People’s Bank of China (PBOC) has not reported adding any gold to reserves since October 2016. That was the month that the Chinese Yuan was admitted to the International Monetary Fund’s Special Drawing Rights. Since 2016, the PBOC gold reserves have stood at 1843 tons.
While the PBOC has not added any gold, demand for gold in China remains strong when measured by imports into Hong Kong and withdrawals on the Shanghai Gold Exchange (SGE). 2018 is shaping up to be the second or third best year in terms of gold withdrawn on the SGE.
Gold withdrawals on the (SGE) through September 2018 were 1,555 tons. Gold withdrawals on the SGE are often considered a proxy for physical gold demand in China and that demand continues to be strong. Indeed, SGE withdrawals through September were the third highest amount in the exchange’s history.
The Shanghai Gold Exchange (SGE) monthly gold withdrawals topped over 188 tons in September. For the first nine months of 2018, gold withdrawals on the SGE were 1555 tons vs 1,505 tons through the first nine months of 2017 and 1,407 tons through the first nine months of 2016. Only the first nine months of 2013 when 1,672 tons were withdrawn and 2015 when 1,989 tons were withdrawn have been higher.
September 2018 withdrawals of 188 tons of gold were the fourth highest September total in the SGE’s history.
The SGE has been reporting significant monthly withdrawals annually since 2013. In 2015, the SGE reported a record 2,597 tons of gold had been withdrawn, an amount roughly equal to the annual global gold mining production. Robust gold demand as measured by Shanghai Gold Exchange withdrawals continued in 2017. The pace of gold withdrawals in 2018 is about 6% ahead of 2017’s pace through the first eight months.
Monthly withdrawals on the SGE since 2013 have often topped 200 tons. The chart below illustrates the big jump in monthly withdrawals in recent years.
In addition to a rapidly growing SGE, Chinese gold imports have also soared in recent years through Hong Kong and Shanghai. Chinese gold imports through Hong Kong peaked at 1,158 tons in 2013 and were 861 tons in 2015 and 770 tons in 2016. In 2017, Chinese gold imports through Hong Kong were about 628 tons. From 2004- 2008 Chinese gold imports through Hong Kong were only 339 tons.
Last month the Shanghai Gold Exchange began trading in 30 gram Chinese Gold Panda coins. These coins are available for sale at BGASC.com
While China has aimed for increased transparency in its gold holdings and imports, it does not yet disclose gold imports through Shanghai.
Chinese Gold Mining Production
China is also the world’s largest producing nation having mined approximately 450 tons of gold a year for the past three years.
With an increasingly wealthy population of well over one billion, China is expected to play a greater role in gold consumption and gold pricing in the coming years.
About the Shanghai Gold Exchange
The Shanghai Gold Exchange on October 30, 2002, by the People’s Bank of China and organizes the trading of gold, silver, platinum and other precious metals.
SGE data from goldchartsrus.com
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.