China Gold and Silver Consumption Surges

The China Gold Association just released figures for 2017 showing gold consumption rose 9.4% in 2017 to 1089 tonne.  Jewellery was up 10.35% to 696.5 tonnes, investment bullion rose 7.28% to 276.4 tonnes, and industrial and other use surged 19.6% to 90.18 tonnes.  This is in contrast to reports from Commerzbank saying gold imports fell 18%, but yet again this is a report fixated on gold via Hong Kong and missing the fact direct imports into Shanghai are now a major contributor to Chinese imports.  The CGA report attributed the growth to recovering high-end demand and rising consumption in China’s second and third-tier cities, and safe haven investment amidst volatility in the financial markets.

Against that rising consumption they also reported Chinese production, whilst securing its 11^th straight year of being the world’s highest, fell 6% to 426 tonne though still nearly twice that of second place Australia.

Silver also saw exceptional growth in China in 2017 with Commerzbank’s report quoting a 28% increase to a whopping 4,300 tonne, a seven year high.  That surge was largely off the back of increased industrial demand for solar panels and electronics.  According to Commerzbank “Last year saw solar-cell production stepped up considerably for the second consecutive year in China, with over 50% more solar panels installed. This resulted in high demand for silver”

From analyst Ted Butler:

“….world mine production data indicate that China mines more gold than any country in the world, producing some 15 million oz a year, close to 15% of total world mine production (100 million oz). In silver, China is the third largest producer in the world, mining more than 110 million oz annually. It is also well-known that China does not export any of its gold or silver (except where included in exported manufactured goods). What this means in simple analytical terms is that, effectively, China accounts for (and takes off the market) 30% of the total world silver mine production (250 million oz out of 850 million oz) and 35% of total world gold mine production (35 million oz of 100 million oz), truly remarkable percentages.”