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Shanghai Gold Exchange Withdraws on Torrid Pace Through March

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The Shanghai Gold Exchange Reports Over 500 Tons of Gold Withdrawn through March.

Gold withdrawals on the Shanghai Gold Exchange (SGE) opened 2018 at a strong pace. Gold withdrawals on the SGE are often considered a proxy for physical gold demand in China and that demand continues to be strong. Since U.S. tariffs were announced at the end March, any increased gold demand as a result of that action are not fully reflected in March’s numbers.

The Shanghai Gold Exchange (SGE) monthly gold withdrawals topped over 192 tons (approximately 6.2 million ounces) in March. For the first three months of 2018, gold withdrawals on the SGE were 535 tons vs 525 tons through the first three months of 2017 and 516 tons through the first three months of 2016. Only the first three months of 2014 and 2015 had greater withdrawals of 564 and 625 tons, respectively.

SGE first three months of year 2008 - 2018

March 2018 withdrawals of 192 tons of gold were the second highest March total in the SGE’s history, topped only by 2015’s record 213 tons of gold withdrawn.

SGE gold withdrawals in March 2008-18

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 In 2015, the SGE reported a record 2,597 tons of gold had been withdrawn, an amount roughly equal to the annual global gold mining production.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 slightly ahead of 2017’s pace through the first quarter.

Shanghai Gold Exchange Annual withdrawals 2008 - 2018 through March

Monthly withdrawals on the SGE since 2013 have often topped 200 tons. The chart below illustrates the big jump in withdrawals in recent years.

Shanghai gold exchange monthly withdrawals 2008 - 2018 march

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.

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While China has aimed for increased transparency in its gold holdings and imports, it does not yet disclose gold imports through Shanghai.

China is also the world’s largest producing nation having mined approximately 450 tons of gold a year for the past two years.

The People’s Bank of China’s Gold Reserves

In July 2015, the People’s Bank of China (PBOC) released their first update to gold reserves in six years. The PBOC reported that they had added 604 tons of gold to their 1,054 tons held in reserve, bringing their total to 1,658 tons. Since then, through July 2017, the PBOC has added approximately 185 tons of gold, bringing its total to 1,843 tons. The PBOC gold holdings place it squarely among the top gold holding nations behind only Russia (1881 tons) France (2,435.50 tons), Italy (2,451.80 tons), Germany (3,363 tons) and the United States (8,133.50 tons).

Gold reserves by Country Top ten April 9 2018

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.

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This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.