CHINESE GOLD DEMAND: Twice As Much As Official Reported Figures

For some strange reason, the Western official gold demand figures for China are WAY OFF.  According to a recent article by Koos Jansen at Bullionstar.com, the Chinese Gold Association reported much higher gold demand than the figures published by the World Gold Council.

In the article, China Gold Association:  2013 Gold Demand Was 2,199t, wholesale gold demand in China was 2,199 metric tons (mt) in 2013 compared to the 1,066 mt reported by the World Gold Council.

Total Chinese Gold Consumption 2013

This is not a small disparity in reported gold demand by these two organizations, but a huge 1,133 mt difference.  Surprisingly, the difference between the two is actually greater than total Chinese gold demand stated by the World Gold Council.

Koos Jansen explains this in the article by writing the following:

As you can read below in the translation from a Chinese press release about the China Gold Yearbook 2014, the CGA states Chinese wholesale gold demand in 2013 was 2,199 tonnes; bullion import 1507 tonnes, doré import from overseas mines 17 tonnes and domestically mined gold accounted for 428 tonnes. (scrap supply must have been 247 tonnes)

…The information the CGA publishes in English about Chinese non-government gold demand, 1,176 tonnes in 2013, severely understates true non-government gold demand, 2,199 tonnes in 2013, which is only disclosed by the CGA in the China Gold Yearbook 2014 exclusively published in Mandarin hard copies.

Chinese Gold Yearbook 2014

(courtesy of BullionStar.com)

All Western institutions and press that attended the China Gold Congress have Chinese employees who can perfectly read the China Gold Yearbook 2014. Like I said, why these institutions don’t publish true non-government Chinese gold demand is “a mystery”. I can tell you this though, 99.99 % of the global financial industry uses the Chinese demand numbers from the WGC, which state 2013 demand was 1066 tonnes. From an investment point of view this can give you an advantage.

So, what Koos is saying here is that the Chinese who can read their own 2014 Gold Yearbook know that the ACTUAL DEMAND was 2,199 mt compared to the stated 1,066 mt by the World Gold Council.  It seems as if the Chinese rather the West advertise Chinese gold demand is much lower than it actually is.

Looks like they don’t want to spoke the markets.  This allows the Chinese to purchase more gold with soon to be worthless U.S. Fiat Dollars before its value collapses.

I recently sat down with Mike Gleason at MoneyMetals.com and did an interview, where I stated the difference between gold demand figures from 2008 & 2013.  I used a chart put out by the Australian Bureau of Resources (using World Gold Council data) showing the change in gold demand from different regions and countries from 2008 compared to 2013

BRAINDEAD Award USA

Even though Chinese gold investment demand increased more than five times in 2013 compared to 2008, this chart doesn’t represent the true increase.  If we assume that total Chinese gold demand in 2013 was double the figure put out by  World Gold Council, we can assume that physical gold bullion investment demand was probably more like 700-800 metric tons, and not the 400+ mt.

Which means, 2013 Chinese physical gold investment demand is probably 10 times greater than what it was in 2008.  It’s hard to tell if the World Gold Council underestimated other regions or countries, but I highly doubt Americans increased physical gold investment demand as the majority of U.S. citizens are still brainwashed into believing DIGITS in a bank or brokerage account is wealth.

This can be seen as the U.S. gets the BRAIN-DEAD award for being the only region-county that stated a decline of physical gold investment in this time period.

I will be publishing my first paid report shortly.. called THE U.S. GOLD MARKET REPORT.  I provide some interesting trends and data showing just how large the cumulative U.S. Gold Deficit was since 1981.  The report is 38 pages with 25 charts.

Please check back for new updates, articles and the soon to be released U.S. GOLD MARKET REPORT at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

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30 Comments on "CHINESE GOLD DEMAND: Twice As Much As Official Reported Figures"

  1. What do you think when you read: “World Gold Council”?

    • houtskool,

      While I can admit the World Gold Council did get this total figure off by spades, their figures aren’t as bad as most believe. For example, 1H 2014 gold demand is down considerably… stated by the World Gold Council updates. This was shown by the huge decline in Official sales of Maples, Eagles and etc as well as jewelry demand. Even Koos discusses this in a recent article

      So… I wouldn’t THROW OUT all their data… but we have to go over it with a magnifying glass

      steve

  2. Steve,

    What impact do you think lower silver prices will have on base metal miners? I’m just wondering how much a higher silver price has helped make their balance sheets look healthier then they should of been

  3. Steve, is Russia included in ‘Europe’ or ‘RoW ‘in the chart?

    The Swiss vote, which regardless of the hype out there atm, is sure to be a close run thing and will have an impact in four weeks.

  4. “Americans increased physical gold investment demand as the majority of U.S. citizens are still brainwashed into believing DIGITS in a bank or brokerage account is wealth.”

    Just to remind you, liabilities are paid in dollars. And will be for a long time. Even if the dollar crashes, you will still be paying your liabilities off in dollars. Mortgages, tuition’s, and even mandatory spending on oil and food and utilities are paid in dollars.

    The dollars might not be “wealth” but they are needed for liabilities. And as asset prices crash around the world, the cash is nice to have.

    • The current dollars are better defined as FRN’s [Federal Reserve Notes]. That may sound like splitting hairs, but they do not meet the constitutional or founding fathers’ [documents] definition of a dollar [like The Coinage Act of 1792].

      The current FRn’s are the legal tender. But they could be devalued overnight. Or the buying power could be massively reduced in a few months with hyperinflation.

      As necessities of life cost more and more dollars [the current FRN, or a newer devalued dollar], it would be good to have a “commodity” like the historical monetary metals to exchange for a lot of FRN’s to pay one’s liabilities. Or to be used directly. I have a service-based business. I’ll accept silver now if someone wants to pay me with it.

      As asset prices crash around the world the dollar may be crashing with the rest of these assets.

      Gold or silver has a history of maintaining buying power in deflation and inflation.

  5. If demand for gold in China has doubled wouldn’t that increase the price of gold. And here is where the ETF’s break down. If a major ETF holder sells and purchases physical gold wouldn’t that cause the price to drop. I would like to see the system go back to a supply and demand market. As long as the banks can use the ETF market to rig prices its never going to be the price it is supposed to be.

    • Demand in China has not actually doubled, it’s just that we now know what the true demand is. Demand has always been there, it’s just that WGC has under-reported it by half.

      But, yes, if world demand exceeds supply, prices should be rising. And would be rising were it not for the manipulation of price on the Comex in particular by the Bullion Banks selling naked paper short contracts into any rise in price. There are 100 paper claims on every physical ounce. The new Shanghai futures exchange, which prohibits naked shorting and settles all contracts with physical metal, may over time render Comex irrelevant as a price discovery mechanism for physical Gold. At present, the paper “Tail” is wagging the physical “Dog” so paper products are setting the price for physical Gold. This is wrong, it should be the real price of the physical which sets price not paper, which is open to manipulation by Central Banks and Bullion Banks; which is how they like it.

      Regarding GLD (The Gold ETF) you need to understand how it works. ONLY the Authorised participants (AP’s) can actually withdraw (Or increase) physical inventories in units of 100K shares. This decreases or increases the GLD share float but the remaining shares still floating will continue to mirror the market (Paper) price of Gold but NOT NECESSARILY the proportionate vale of the physical inventory. Last year the AP’s, essentially the Bullion Banks, drained GLD as a source of physical Gold to ship to meet demand in China and other points East. This year to date, as a further example, GLD inventories have declined by about 8%, whereas the price of Gold is UP about 2%. This suggests that, again, the AP’s are using GLD as a way of accessing physical Gold to meet demand for physical without pushing price up.

      • Apologies, my earlier post above should have been clearer that as the share float increases or decreases as the AP’s deposit or withdraw physical Gold, the market price of a single GLD share still reflects the market price of the market price of the inventory held. To simplify; if the AP’s continue to withdraw from the physical inventory (And it has been a one-way street, reflecting the physical demand), then the number of shares outstanding will continue to fall so that the remaining number of shares still reflect the new physical holdings, which in turn reflect the market price of Gold (Set by paper). So withdrawals or deposits of physical metal DO NOT impact the price of a GLD unit (Which represents 1/10th of an ounce of Gold) because the outstanding float gets adjusted accordingly, in units of 100K each time

        I hope that provides a clearer explanation.

    • “As long as the banks can use the ETF market to rig prices its never going to be the price it is supposed to be.”

      You are absolutely right. The digital or paper shares manipulation will end, and the reasons are known, but when is guesswork.

  6. I recently sent an email to WGC asking them, now that China has officially published figures for domestic Wholesale Gold consumption, when would they be revising their global supply and demand data. That was over a week ago and, to date, no response despite their stated policy. I’ll share if I do. What a surprise!!

    Gain, kudos to Koos who worked out the quite simple equation for Chinese Gold offtake:

    Imports + Scrap + Domestic Mine output = SGE Offtake = Domestic Wholesale demand.

    The does not, now confirmed by official sources but long suggested by Koos, does NOT include PBOC purchases for Reserves. PBOC wants to recycle USD into Gold and SGE operates in RMB so to reduce USD reserves it must buy offshore. As Steve has noted, the latter demand could, just by investing ongoing USD trade surpluses (Instead of adding to UST’s) they COULD have accumulated 10,000 Tonnes over the last few years. And, as Alisdair McCleod has added, since 1983, this amount could very easily be as much as 30,000 Tonnes.

    So without WGC revisions very soon, we can only be left with the conclusion that WGC has an Agenda. It seems truly remarkable to me that an association which ostensibly is in existence to represent and promote GOLD, should be, apparently, actively working against the best interests of physical Gold and its membership.

    Why would any Gold producer, or any other body interested in the best interests of Gold, pay good money to remain a member of such an Organisation? And, indeed, if all such were to resign memberships, leaving behind only the Investment and other Banks as members, at that point, the Agenda of WGC would be much more clearly apparent.

  7. this guy update oct 24 here a lot of long-term (decades) charts on chart formations.
    claims no manipulation, but he doesn’t think there’s anything defective or crooked with the current money system, either, so sounds like he spends every minute in the basement studying charts yet has ZERO knowledge of history.
    says no low gold till $900.
    previous site article said $13 silver.
    Available to read on scribd.

    http://peterlbrandt.com/chart-history-gold-market-updated-edition/

    • IMHO Technical Analysis (Charts etc.) is of questionable value when markets are being so badly manipulated. There comes a point where markets self-correct. If the All-in cost of mining Gold ($1200) and Silver ($16), why would anyone continue to produce at prices lower than cost? That would lead to a fall in supply and increase in price.

      I can’t imagine how anyone could still believe that the markets (All of them) are not manipulated?

      • I’ve seen two sources [with data] that show the cost of mining silver [including necessary equipment replacement, not letting go of key mining employees, etc.] is in the range of $23.

        What say you Steve?

        • @David.

          Whatever, but my point remains the same regarding production and self-correcting prices. And all-in costs have been declining because of the reduction in energy costs. Probably temporary but real nonetheless.

        • David,

          My current break-even is $19.60 for my top 12 primary silver miners. Now, that he price of oil has fallen $20 in the last few months, costs could fall even lower. However, we already have a $16 price now.

          However, a SUSTAINABLE PRICE would have to be north of $20.

          steve

          • OK sustainable price must have been what David Morgan was referring to recently when he mentioned a $23 price.

  8. I think when things go to sh-t currencies will revert to being backed by gold. Only those that do will been seen as having any value. It may be wise to load up on Yuan if you just have to hold paper, you know, and beat the rush. While other nations are backing their currencies with Gold the United States and those that sold “paper gold” will be attempting to explain why the holders of that paper gold can not get their gold. That it’s gone, sold to China or used as collateral on upteem loans. Too bad, so sad.

    • HYMN “It may be wise to load up on Yuan”

      You have hit the nail on the proverbial head! This has been occurring with increasingly active international activity. Mainly in the way of RMB backed bonds.

      http://www.globalcapital.com/article/nrfwbpk8h9p8/americas-investors-flock-to-british-columbia39s-second-rmb-bond

      Along with a very large gold bullion stack, China must also have an equally well established global bond market. If it is to realize it’s goal as the owner of the next reserve currency. I totally agree with your premise of owning some Yuan and I do. The sale of this second RMB backed bond issue by British Columbia is very popular. If it matches last years offering in sales, then its already sold out!

  9. This take down in gold and silver really have me thinking. For starters, I do not think gold and silver have EVER had a good week during “FOMC” week. Secondly, this violent slam downs tells me the banking cartel are desperate. What have they been desperate you ask?

    I’ve studied this enough to know now. In 2013, the withdrawal of PHYSICAL gold from the GLD was historic. SOMEONE NEEDED GOLD. Since those withdrawals, the price of gold has been “comfortably” manipulated.

    BUT, and as Steve points to, gold demand by China alone consumes the vast majority of annual gold production. With worldwide demand outstripping supply, the supply I believe IS truly becoming a problem.

    So look at this weeks action (on top of being a FOMC week), the slam down in the paper markets looks to me like a complete capitulation phase. Why? Because the central banks are totally nervous here…..if the Swiss Gold Initiative passes, another HUGE/GIGANTIC buyer comes into the PHYSICAL gold market. The bullion banks NEED to try to shake the trees one last time to get more physical to try to meet delivery needs going forward. THEY ARE NOT going to get what they NEED this time.

    The price will begin to skyrocket IMO over the next 3-6 months now. I think you are going to see SIGNFICANT short covering by the crooks on the COMEX in the coming COT data.

    This means, I’m going to HAVE to buy this PAPER DIP at some point. In other words, it’s time to get really bullish on the metals. The turn is coming.

    i still think oil service stocks are gravy too–because as we hit PEAK PRODUCTION, the treadmill boys are going to be spinning it hard, and spot oil is going to have to go up as well. Until it all crashes of course.

    In the meantime, let’s just cross our fingers for America boys. It is game time.

    • Frank, I think your oil call is right on.

      One big “tell” is the commodity sector – Commodities Tracking Index Fund NYSE (DBC) which is trading at a very low level. Which should mean a very low level of global demand. To cross check this have a look at the Baltic Dry Index (BDI) which has been on a tear for the past two weeks! So what gives? Low commodity demand should show a low demand in shipping?

      One in depth look beneath the surface shows this; China has been buying crude oil with a both hands gusto since the price smash down of crude. Leasing every Very Large Crude Carrier (VLCC) tanker that it can lay it’s hands on and in the process pushing up the BDI to it’s current level. I see that now the BDI has turned. Has China got it’s fill of crude? Are there no longer any free VLCC’s to lease? Interesting. Is it not?

    • Frank,

      In your opinion how much gold they got from the 2013 paper ambush ? For me not much, it is just they got some cheaper ETF sales but that’s it.

      In my opinion the gold and silver physical movement is no problem up to now so everything is determined by paper gold/silver.

      If and when we go (much ?) lower, they will get what everything remaining with the ETF and maybe some more from hidden sources but we cannot know and will never know.

  10. Herman the German | October 30, 2014 at 1:18 pm | Reply

    @Frank

    I like the way you think!

    But keep some powder dry, if a final sell-off comes (magic 1180).

    In regards of COT we saw the sky high short positions in gold and silver.
    I am wondering though, if the COT-data is credible.
    DXY also sky high and not sustainable.

    The miners really got slammed today. Goldcorp real cheap now.

    I am really excited about the Swiss referendum. Shorts habe to cover at least some positions.

    Also glad when Ehen midterm elections are over and markets hopefully getting less manipulated.

    • It seems tha worst is coming. Most miners will be bought by china for peanuts next year.

      Silver, will surely go single digits.

  11. i keep telling you–NO bottom till all the filthy worthless howling arrogant lying scum ignoramuses posing as gurus are cleaned out and gone, spotted out shopping in the sporting goods/camping section to buy a tent to pitch under a bridge somewhere.
    every last GDF one.
    it’s the least these slime deserve.

    • tom,

      What a thoughtful and awfully cute comment. You don’t realize it, but you could have a career in the Hallmark Card industry.

      steve

      • How many years you are wrong with your Metall pumping?
        When the stock markets will really fall, we see 10$ in silver.

        I ask you what is your Motivation?The best silver stocks where falling 10% at one day.
        When do you accept that you are allways wrong?When you get bearish I will buy some silver and gold.Ha Ha!You are the best contradictor we have.

        • silverfreaky,

          Always a pleasure getting your comments. Nice to know that you support the PAPER MACHE INVESTORS. Your shortsighted opinions are always welcome.

          steve

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