Meanwhile…The Chinese Have Accelerated Their Gold Accumulation

china bank runThey sell…we buy.  
Ancient Chinese secret…


Submitted by Koos Jansen, In Gold We Trust:

In week 21 (May 19 – 23) Chinese wholesale gold demand, measured by SGE withdrawals, was 36.4 metric tonnes, up 22.98 % from the week before.  This is the highest weekly demand since week 9 (February 24 -28). 36.4 tonnes is just shy of the year to date weekly average of 37.5 tonnes. Chinese gold demand has been down in recent weeks from extremely strong in the first 9 weeks of 2014 to less strong in the last 12 weeks.

 

 

Shanghai Gold Exchange withdrawals only 2014 week 21

 

 

The insight SGE withdrawals give us has again been confirmed by the latest trade data from Hong Kong and Switzerland. Net export of both counties to China mainland in April was down from the previous month. Hong Kong net exported 65.4 tonnes to the mainland in April, down from 85.1 tonnes in March, Switzerland net exported 12 tonnes to the mainland in April, down from 26 tonnes in March. These numbers were expected as they match SGE monthly withdrawal numbers. SGE withdrawals in April were 130 tonnes, down from 147 tonnes in March.

 

In April the mainland was supplied by 77.4 tonnes from Hong Kong and Switzerland, 33 tonnes came from domestic mining and an additional 19.6 tonnes of supply came from scrap and/or import from other countries. Note, there can be gold en route from being imported till its sold on the SGE and not all gold supplied to the SGE will be withdrawn from the vaults, some members/individuals hold it in their SGE account.

 

 

SGE vs COMEX ™ April 2014

 

 

Silver withdrawals are unfortunately not published by the SGE, though it wouldn’t be that interesting as gold withdrawals. The Chinese silver market is not constructed as the gold market, hence silver withdrawals wouldn’t inform us about Chinese total silver demand. However, in week 21, we can see that the premium of spot silver on the SGE was still trading at more than 5 % above the international price, measured by the Ag(T+D) contract.

 

 

SGE silver premium

 

 

On the Shanghai Futures Exchange most silver contracts were trading in backwardation on May 30. This is the curve:

 

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SHFE silver backwardation may 30, 2014

Overview Shanghai Gold Exchange data 2014 week 21

 

- 36.4 metric tonnes withdrawn in week 21 (19-5-2014/23-5-2014)
- w/w + 22.98 %
- 787 metric tonnes withdrawn year to date.

 

My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information read this.

 

Shanghai Gold Exchange withdrawals 2014 week 21

 

 

This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.

 

SGE withdrawals week 21 2014

 

 

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).
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Shanghai Gold Exchange gold premium

 

 

 

Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

 

 

Schermafbeelding 2014-05-30 om 14.49.06

 

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Comments

  1. I’m still getting the impression that the Chinese government is laying out a little slack on gold demand, so the Western bullion bankers have an opportunity to ‘scare up’ some inventory for their near-empty vaults. I can hear the phone call … ‘look, if you immediately pull everything right off our loading docks, you’re gonna blow our ‘story’, so give us some wiggle room here, okay?’

    What a shame, Koos can’t get a good strong fix on the silver side over there. Asia’s historic preference for silver money can’t have evaporated, so I’d REALLY be FASCINATED to see more data from the region regarding silver.

    • This is pretty interesting story, India has big plans to use Silver in the solar industry.  Story States India is going to gobble up Silver inventories and driving the price e of Silver up.  But I do not think anyone told India that the west is manipulated the commodity markets?  We can only wait until the last ounce of Silver leaves the store front.  I got this info from “The News Unit,” where I got the Velvet Cult utube.  So here is the short and sweet expansion of India building Solar panels.  Finally, there is a substitute for Silver applications called “Graphene,” yet time will tell?  (PS The original link is from Gold bug). http://etfdailynews.com/2014/05/29/why-demand-for-silver-is-going-to-explode

    • @_REPUBLIC [FOR] MARS_
      It is true Graphene is trying to be created and is supposed to eventually rival silver. However, as I have so far read and seen, it’s about 20 years away from that level if all goes swimmingly. And will be way more expensive than silver. They’re not going to offer it at significantly below it’s value after all the R&D they will have done.
      So I personally believe it’s a non starter as a rival. I’m also dubious that it will be as perfect and versatile as silver.
      So I keep stacking :)
      If silver were to become ‘extinct’ in 6 years as was purported by the USGS with current demand, that leaves one helluva gap in time!!!
      JC

    • @_REPUBLIC [FOR] MARS_
      maybe in ( few ) application, silver can be replaced by graphene or other metal or alloy
      but sometimes engineer / industrialist still choose silver for their application because of many factor, such as :
      1. cheap… compared to other metal ( gold, platinum, palladium, etc )
      2. the best reflector of light ( in many mirror, lamp reflector still using silver because of their superiority in reflecting light )
      3. malleable ( can be rolled / shaped as thin as human hair )
      4. the best electrical conductor
      5. have slippery surface ( used in ball bearing )
      6. have (relative) high melting point ( compared to tin, lead, etc ) but not as high as tungsten or platinum
      ( in many cases silver that have “medium” melting point are suitable for specific function )
      and many-many silver characteristic that need to revealed in the lab

    • It’s not just solar cells that are gobbling up silver.  Silver jewelry is coming on pretty strong in India these days too.  Don’t know about that in China but it would not surprise me a bit.
       

  2. Alternative Viewpoint Here. I just spoke to a guy here in Raleigh this past week who is a pm’s dealer plus he’s a numismatic expert not only with US coins but foreign coins as well.He has been written up in the papers here periodically. You guys reading this need to heed what he just told me and I’ve got no reason to bullshit you. I was a believer in silver 3 years ago like the rest of us here. He stated that despite all the arguments that silver was money for thousands of years etc etc, It will Never be money again. He said the people in charge will see to it. I was about floored. We spoke for over 1.5 hours and I brought up All the arguments,which he is well versed in. He likes gold but unloads all his silver as it comes in.He said a person would be better investing in land,jewels, or gold. Silver has been so diminished in public perception(he said) that it will almost be impossible for it to be thought of as rare or of unique value in the foreseeable future.Other things(even during a reset or collapse) will go up in value exponentially more than silver.If that is true, we are in the wrong protection asset! Lastly, As prices go up, those that have been burned will start to unload, thereby causing the price o stay down for years to come. Anyway, that’s another viewpoint that should be considered at this point based on 3 years of experience. Regards.

    • Bradford … “I just spoke to a guy … who is a pm’s dealer … I’ve got no reason to bullshit you … He said a person would be better investing in land, jewels”
       
      You sock puppet operatives always betray yourselves by the very nature of the goofy stories you concoct. No numismatist PM dealer would EVER disparage the products he makes his daily living in … even if he did feel it was a silly thing for folks to have an interest with. It’s like a hat dealer telling his customers that hats cause baldness.

      The types of folks who say the sort of things … you always say here … are real estate agents, jewelers, bankers … or government cyber spooks, who rather have scores of reasons to BS us.

    • Well said Pat. That story is garbage.

    • “All the arguments,which he is well versed in.”
      Any argument, in of itself, is not necessarily believable unless it is backed up by data and/or facts.
       
      “If that is true, we are in the wrong protection asset”
      There’s no way to know until it actually happens and history favors the opposite of that assertion.
       
      “Anyway, that’s another viewpoint that should be considered at this point based on 3 years of experience.”
      I hardly think 3 years of experience qualifies this dealer as an expert on anything. I would consider this person’s viewpoint as much as I would a grocery clerks viewpoint on the importation of bananas.

      Oh, and ah,
      “You guys reading this need to heed what he just told me and I’ve got no reason to bullshit you.”
      Depending on you or your dealer’s motivations, you both may have all the reasons in the world to spread BS. A very unconvincing statement, to say the least.

    • “He said a person would be better investing in land,jewels, or gold.”

      Jewels? Really, he said jewels? LMAO ….. Jewels, unless they are incredibly large and essentially flawless, are about the worst investment on Earth (unless you want to ensure martial bliss) …. almost all can now be manmade including diamonds, rubies and emeralds. The salesmen make the all money, but just try to sell one back as you are guaranteed a 50% haircut unless you have something very, very special.

      I can agree that good farmland with an ample freshwater supply is valuable, but it is hardly foolproof (not to mention the yearly taxes and lack of liquidity should you need to sell). Gold and silver still seem the best to me….
       
       

    • BS ALERT! Obama bot shill!

    • “I can agree that good farmland with an ample freshwater supply is valuable, but it is hardly foolproof (not to mention the yearly taxes and lack of liquidity should you need to sell). Gold and silver still seem the best to me….”
       
      Nothing is foolproof.  Just when we think that we have found something that is, along comes a better class of fool to upset the apple cart.  A small farm-able acreage that one can also live on has a lot of potential for protecting us from the worst aspects of hard times, however.  Those who can grow food will always have something that is in demand.  Having a good source of fresh water thereon is mandatory.  That said, gold and silver are highly appealing assets with a LONG history of excellent performance during very hard times.  But then, do we really need to pick one or the other?  Probably not.  :-)
       

  3. China is setting up to have there money backed by gold and that will force the price of gold up to what they set the price at it fine with me. As I have read in many places one day the price of gold will jump up to whatever they set the price to its coming keep stacking. ..

  4. Pat Fields   Perhaps the reason that China’s gold consumption was off a bit is that they have been investing in their new partnership with Russia plus liquidating assets to pay down private, commercial and bank debt.  Sometimes a person or even a country has to take a breather.  Even Charlie takes a breath to gather up FIAT to make another purchase.
    Even if silver is not used as money, like I do on a regular basis,  silver’s role in other arenas is not going to change.
     Medical, solar, electronic, clothing, military and jewelry are not going to change, graphene notwithstanding.  Graphene will be price rigged if it becomes a regularly used and desireable commodity. Monetary bases might resurface on either a regional basis or even nationally. But not monetary as we commonly accept it.  Silver as a precious metal can and will likely see a resurgence as a monetary metal if people lose confidence in the paper FIAT.  It’s just a matter of getting used to it.
    My mission is to get as many people comfortable in accepting silver for payment.   I’m up to about 7-8 people who deal on that basis and do so regularly.
    I’d like to see a 3 D printer thatwould use silver as its material and be able to craft objects with this technology.  That would be a fun project.   A person could take .999 silver and manufacture a local currency.   The owner of the 3 D printer would take a small bit of silver as payment for this creation.  Even custom coins would be possible.  Cheers   Anyone like that idea?

    • With four trillion in the cupboard, they’re hardly likely to be ‘taking a break’ I think. Would you? Not me.

    • “With four trillion in the cupboard, they’re hardly likely to be ‘taking a break’ I think. Would you? Not me.”
       
      If what we are reading about the funding in their shadow banking / finance sector has any truth to it at all, they could be looking at $20+ trillion worth of liability in that area.  Seen in that light, the $4T that they have in US dollar denominated assets looks like small spuds.
       
      Besides… depending on their current cash flow needs, it is possible to be very wealthy and yet have to stagger payments on some things to match up their cash flow with their other requirements.  No telling how much of that $4T stash is already spoken for or is being held as necessary reserves.  Things like this are very difficult to ascertain with China.  They play their cards VERY close to the vest… or whatever it is that they wear instead.  ;-)
       

    • Ed_B … “they could be looking at $20+ trillion worth of liability”
       
      All good to excellent points, Ed … to which I must dutifully defer. (shoot, I hate it when this happens) … (:-(

      Now, more than that, I have to thank you for keeping me on my toes. (:-((

    • @PatFields
       
      Now, more than that, I have to thank you for keeping me on my toes. (:-((“
       
      No problem, Pat.  Our primary duty here it to keep each other on our toes!  That’s happened to me a lot around here.  lol
      But, I keep coming back for more.  I think that’s a good sign.  ;-)
       

  5. Agreed Pat   Additional details say that Russia bought 26 tons.  Maybe they took supply, taking turns looting the vaults.  Tag team precious metal wresting, MMA style   That Monetary Manipulation Adjustment Wresting.
     There may have been a kink in the supply chain. The bullion banks will tap out soon enough
    I am of the opinion that China will continue buying with that $4 Trillion.   

  6. I have been in pm’s for 3 years. This guy has been in it for 40 years. His name is George(1st name only) and he’s in business here so call him up-(919)556-8300. Like Norcini said, It’s kinda pathetic listening to the pm’s crowd still coming up with every excuse in the book as to why they were wrong. Sad thing is, I was one of them. Timing is everything in the investment world guys. We were wrong-The FED has wiped up the street with us and probably(based on historical data NotSure)can continue to do so in the foreseeable future.Now if someone can tell me when they will somehow magically lose their power to continue, please let me know.

    • I don’t know what’s worse, your constant bitching and moaning around here or the fact that you have absolutely no idea what you’re talking about. Trader Dan Norcini? LOL, pretty comical quoting that guy considering what Ecuador just did.

      http://www.zerohedge.com/news/2014-06-02/ecuador-transfers-half-its-gold-reserves-goldman-sachs-exchange-liquidity

    • Bradford said: “Timing is everything in the investment world guys.”
      Yep …. time to buy is when everyone has given up. Seems like you have a bad case of buy high, sell low.

    • Bradford … “This guy has been in it for 40 years.”
       
      Guess what … you’re just sinking deeper into your pit of bull-crap the more you yap away. Like I said, you fellows ALWAYS betray yourselves over time with the impossibly illogical junk you resort to.

      Someone who’s been saving in silver for 40 years has a stack cost-basis low in the 1.5 to 2.25 banknote-per-ounce range. That astute fellow is set up for a VERY comfortable retirement … even after this current period of phony ‘strength’ in banknotes.

      For all we know … you’re ‘George’ … working as a clerk-salesman in the expert numismatist’s shop … jealous of the owner’s lifetime of patient wisdom, while feeling tricked by your very own myopic short-term focus.

  7. No worries. I’m bailing out and done. Keeping a 2011 monster box just as a reminder of what kind of idiot I was and in the unlikely event that what the numnuts on these blogs are saying turns out to be correct sometime in this century. You are correct about one thing Bay. I didn’t then and don’t to this date know what I’m talking about-otherwise I wouldn’t have lost my ass. Later. 

    • Brad, you’re bitter bc your timeframe has been dealt a blow by your “owner” who doesn’t want you to emancipate yourself from “his” system lest you no longer would represent “his” interests. I can’t bring myself to have to explain every nuance of how and why save to say that I regret you have given into the very justification that would have extricated you from your “owner”. So sad

    • I certainly do hope you bail and go do something else, because you clearly don’t get it.

  8. I have ceased to be impressed by those who refuse to accept the blatant price manipulation of metals to justify their hair brained grasp of reality. 
    We know it’s manipulated, we know why it’s manipulated and we know how. We don’t exactly know who but that would just be the cherry on top.
    The question one must ask to get an idea of the magnitude here is ” if metals were freely allowed to value to even the slightest ratio to global derivative debt, as to form the basis of tangible real money…what would governments and banksters do with all that electronic and paper fiat they peddle to us as real?!” The answer is choke on it. There will never be enough metals mined at any price to pair value with global debt so the answer for the “owners” is to suppress value, mislead the sheeple, indebt sheeple to system with fiat and above all never ever equate metals to money then repeat with boom and bust cycles. The specifics are numerous but not necessary to expound upon for sake of brevity. 
    Keep smiling and keep stacking !

    • There will be a new commodities basket backed currency. 1:1 no tricks, PM’s, Iron, nickle, other metals, wheat, corn, oil will all be held and used to settle trade between countries.

    • SILVERTONGUEDEVIL … “what would governments and banksters do with … fiat they peddle to us as real … choke on it.”
       
      That isn’t really true. There’s a way to completely neutralize the whole system in a way that restores the metallic scheme of Honest Weights and Measures without ‘crashing’ the paper scheme. No one would be ‘richer’ or ‘poorer’ and daily life for the vast majority would continue on its current status quo pretty seamlessly … but … for the ‘elites’, their source of contrived power and influence would effectively cease altogether. It’s for that reason the change-over isn’t likely to happen. They’d as soon see broad starvation and calamity across the world, plaguing hundreds of millions of people, than loose their ‘privileges’.

    • @SILVERTONGUEDEVIL
       
      “…if metals were freely allowed to value to even the slightest ratio to global derivative debt, as to form the basis of tangible real money…”
       
      An interesting thought, for sure.  My back-of-the-napkin math shows that, if there was 170,000 tons of gold mined on Earth and if the current derivatives amount really is $1400T, the price of gold per ounce to cover this would be about $274,440.  Now, this only counts the derivatives and not any of the fiat paper currency created and called “money” or the UST bonds that have been created.  Adding that in would bring the amount higher… perhaps to $300k or so per oz.  Whoa.  My head is now spinning…
       

  9. One last comment only because this info just came to my attention. I had called Apmex to unload most of my silver holdings this morning. They told me they were paying 1.45 over spot. They just e-mailed me and said they would now pay 2.00 over. I’m going to hang in there now. No reason for that unless they know it’s going up or they need the inventory. Probably the former. 

    • Brad, some sage advice, forget you own any PMs, set the alarm for 2020 and enjoy your retirement.

    • Bradford— Every Friday I go to the Apmex web site to see what the buy back price for silver eagles is. I have this information written down in a book. I just looked at it and Apmex has not offered $1.45 over spot in a very long time. Basically it’s been around $2.00 over spot. Sometimes it’s been a little more, sometimes a little less. 

  10. It is chiefly because of the experiences of people like Brad that I consider my PMs as a financial insurance policy.  This is really no different from a life insurance policy.  People buy insurance, put the contract in a safe place, and forget all about it until it is needed.  Nobody EVER wakes up in the morning and complains that their life insurance policy hasn’t paid off yet.  Financial insurance is similar because if it ever does pay off, it likely will be during some VERY hard times that will be terrible for many of our fellow citizens.  While that would be absolutely awful, it would be worse not to have prepared for this possibility and be as helpless as they during hard times.
     
    As to buying silver and gold, the value of doing so in small increments over time is pretty well proved as far as I can see.  Using a dollar cost averaging approach with perhaps some additional PMs purchased during price pull-backs is a good strategy that allows one to build a stack over time and at a reasonable cost.  The highs and lows of the market are thus moderated resulting in a more stable buying and holding period.
     
    Currently, my stack is worth less in fiat than I paid for it.  So?  It’s still useful to me as an insurance policy against the economic insanity that is currently gripping our nation and most of our world.  At the very worst, I am likely to break even on it over a long period of time.  At best, it will be acceptable money when paper is not.  The odds-on favorite here is that it will end up somewhere in between these extremes.  In that case, it’s still useful to me and I will not regret having taken this ride one bit.  I have a number of paper investments that have done well over time as well.  All of my financial eggs are not in one basket because I am not an all-or-nothing kind of person.
     

  11. “They sell…we buy. Ancient Chinese secret…”
     
    That sounds a LOT like a 1980s Japanese business secret.
     
    Also, what happened to the 5th week on their Chinese gold demand chart?

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