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Brien Lundin: Koos Jansen is the best authority on Chinese gold demand
10:37a ET Friday, October 2, 2015
Dear Friend of GATA and Gold:
Gold Newsletter editor Brien Lundin this week praised gold researcher and GATA consultant Koos Jansen as the best authority on gold demand in China. Lundin's commentary, published in Gold Newsletter's Alert 792, is excerpted with permission below.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
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By Brien Lundin
Gold Newsletter, Alert 792
Wednesday, September 30, 2015
https://jeffersoncompanies.com/
After the orchestrated bear raid on gold in April 2013 that quickly lopped more than $200 off the gold price, demand in price-sensitive China exploded. This had all the appearances of short-term, bargain-hunting buying and I, like other analysts, expected this frenzy of demand to abate. But it never did. Week after week, month after month,
the buying continued at a red hot pace.
By the end of the year, domestic Chinese gold demand as measured by withdrawals from the Shanghai Gold Exchange had risen to an amazing 2,181 tonnes, nearly double the previous year's total, which itself was a record. Demand fell off just a bit in 2014, by about 100 tonnes, but 2015 started off with very high withdrawals from the SGE averaging over 50 tonnes per week.
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I predicted that a record would be set, noting that if that pace kept up, then over 2,600 tonnes would be delivered from the SGE by the end of the year. With only around 3,000 tonnes of gold mined each year, China alone would account for about 87 percent of global gold production!
But it could be much more.
As gold-market analyst Lawrence Williams recently noted, the current pace of SGE withdrawals in recent weeks has been unusually high, and the projection for this year's total demand is running at about 2,650 tonnes.
This runs contrary to "official" estimates by mainstream authorities such as the World Gold Council, CPM Group, GFMS, and Metals Focus, which are claiming that Chinese demand is actually down quite significantly this year.
It's worth remembering that some of these gold analysts completely ignored the SGE withdrawal numbers for a long time, before the sheer size of the withdrawals finally forced them to sheepishly admit that the SGE even exists. But at that point, they began to cover up the embarrassingly large discrepancies by developing successive theories as to why the SGE numbers don’t reflect true demand.
Of course they started with the assumption that their numbers were correct and the Chinese data was wrong, and then attempted to explain away the difference.
As respected researcher Koos Jansen (www.bullionstar.com) has chronicled, as each theory was disproven in succession, they moved on to a new one. Eventually the excuses included shadow banking collateral, "round tripping," movements of stocks, gold leasing, recycling, and more. Each of these theories has been categorically disproven, most notably by Jansen in his blogs.
After following this story intensely for over two years, I have come to the conclusion that no one is doing a better and more accurate job of tracking Chinese demand than Jansen. He is no die-hard, emotional "gold bug" of the type that mainstream analysts like to caricature. I've seen many instances where Jansen has turned up data and evidence that point to potentially lower levels of Chinese gold demand, and in every case he has approached the data with scrupulous objectivity and simply followed the facts wherever they led.
Jansen's objectivity stands in stark comparison with the supposedly official arbiters of global gold demand, who never seem to consider the possibility that they might be wrong. Rather, they seem more intent on preserving their reputations by casting doubt on the data coming out of China.
And the facts clearly show that, whatever the true level of Chinese gold demand may be, it is enormously greater than is being reported by the heretofore experts of the industry.
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