A Guide to the Chinese Gold Market

Everything there is to know about the Chinese gold market and the true size of Chinese private and official gold demand. Start here. This post was updated in late 2017. 

This post will guide you through all relevant articles that have been published on BullionStar Blogs over the years that elucidate the mechanics of the Chinese (domestic) gold market and true Chinese gold demand. If you are new to the Chinese gold market or like to refresh your memory, this post provides a staring point from where to navigate through all segments of the market you like to study. For example, Chinese gold demand metrics, the Shanghai Gold Exchange (SGE) system, Chinese cross-border gold trade rules, the “precious metals" on Chinese commercial banks’ balance sheets, the Chinese gold lease market and official gold reserves held by China’s central bank the People’s Bank Of China (PBOC).

The BullionStar blog posts that collectively clarify all facets of the Chinese gold market are titled the Chinese Gold Market Essentials. If there is anything unclear, if you have additional information or if you have a suggestion to improve the Chinese Gold Market Essentials, please send me an email at koos.jansen@bullionstar.com.

Understanding The Chinese Gold Market Step By Step

The unique structure of the Chinese domestic gold market, the SGE system, and why the amount of physical gold withdrawn from the vaults of the SGE (published on a monthly basis) can be used as a measure for Chinese wholesale gold demand is explained in part one: The Mechanics Of The Chinese Domestic Gold Market. It also provides a basic understanding of contrasting metrics applied to measure Chinese gold demand, and the difference between SGE withdrawals and Chinese consumer gold demand as disclosed by the Thomson Reuters GFMS, which has aggregated to 6,000 tonnes from 2007 until 2016. GFMS and its affiliates have continuously presented feeble arguments that should explain the difference. The Chinese Gold Market Essentials debunks these arguments where necessary, back up by facts, in order to make our best estimate of true Chinese gold demand.

More detailed rules regarding cross-border gold trade in and out of the Chinese domestic gold market and Free Trade Zones in China are discussed in part two: Chinese Cross-Border Gold Trade Rules. When fully comprehending the mechanics of the Chinese domestic gold market and Chinese cross-border gold trade rules you can continue reading Workings Of The Shanghai International Gold Exchange about the international subsidiary exchange of the SGE set up to become the major physical gold trading hub in Asia.

At this point you should have a thorough understanding of the Chinese gold market. To Study more about the difference please continue with The Chinese Gold Lease Market And Chinese Commodity Financing Deals Explained. The post also includes many links to additional posts about the Chinese gold lease market, among others, a paper written by the PBOC in 2011 exclusively translated by BullionStar. Next you should get aquatinted with The Value-added Tax System In China’s Domestic Gold Market, What Are These Huge Tonnages In “Precious Metals” On Chinese Commercial Bank Balance Sheets? (updated until 2015), and China’s Rising Gold ETF Market: A Hybrid, before you can read a detailed study on the difference, and thus true Chinese gold demand: Why SGE Withdrawals Equal Chinese Gold Demand And Why Not (The Argument List).

Finally, please read PBOC Gold Purchases: Separating Facts from Speculation for studying the amount of gold accumulated by China’s central bank in recent years in addition to private reserves. At the end of the post you can find an overview of the estimated amounts of above ground gold in China (privately owned gold and official holdings), updated in July 2017.