Gold, GFMS, China Demand: Koos speaks out — Lawrie Williams [Sharps Pixley]

In a new posting on bullionstar.com – Debunking GFMS’ Gold Demand Statistics – Jansen looks at all GFMS’ latest opinions on this, and why they are all, in his view, incorrect – indeed he describes them as a cover-up, which also has to apply to the theories on this matter promulgated by the other major precious metals analysts. It is hardly surprising that Metals Focus’ analysis comes up with something close to that of GFMS, although perhaps not quite so downbeat. This is because the latter consultancy utilises the services of Hong Kong based consultancy Precious Metals Insights for its Chinese data whose managing director is Philip Klapwijk, former executive chairman of GFMS and who will thus have had ultimate responsibility for the original GFMS research on Chinese consumption. Given Metals Focus provides, as noted above, the data used by The World Gold Council in its pronouncements, this is often the data used by global media as the definitive Chinese gold demand figure.
This might not be a problem if the GFMS and Metals Focus/WGC data was anywhere close to the kinds of figures which Jansen comes up with, but the figures they use are only less than half those suggested by Jansen who bases his calculations on Shanghai Gold Exchange (SGE) gold withdrawals. In part this is because what the consultancies count as gold demand ignores financial/institutional intake, which can be substantial, and which is why Jansen considers the data misleading. Last year, for example, SGE withdrawals amounted to over 2,596 tonnes of gold – a new record – whereas GFMS calculations for Chinese consumption came in at under 900 tonnes a figure also picked up by much of the world’s mainstream media. The difference between that and the SGE figure is ENORMOUS.
We have pointed out here beforehand that the real, and obvious, anomaly comes in when you look at actual gold supply into China. If we add known Chinese gold imports – from Hong Kong, Switzerland, the UK, the USA and Australia, all of which publish gold export figures – and add in Chinese gold production (China is the world’s No. 1 gold producer – some 450 tonnes in 2015) plus an estimate of scrap supply, not to mention direct imports from countries which don’t publish export statistics, we come up with a combined figure of around 2,000 tonnes or more (if anything Jansen’s calculations are even higher). As gold exports from China are officially prohibited – which isn’t to say that absolutely zero goes out, but close – these figures would seem to make the GFMS calculations even more untenable.

This post was published at LAWRIEONGOLD