There are assumptions in this analysis that should be clear to all. But if it only serves to expose the futility of attempts in western capital markets to manage the gold price, the exercise has been worthwhile. For much of 2013 commentators routinely stated that Asian demand was satisfied from ETF redemptions. But as can be seen, ETF sales totalling 881 tonnes covered only one-quarter of the west’s shortfall against China, the rest coming mostly from central bank vaults. – Alisdair Macleod, Renewed Estimates of Chinese Gold Demand (link)
While there has been much debate over the amount of gold that is actually, realistically being transferred from the western bank and Central Bank vaults, all of us who study this issue can say with 100% confidence that any estimates from the World Gold Council, or from WGC-derived analyses, are incorrect by a significant amount. This much we know.
Alisdair Macleod, who is one of the few gold market analysts out there with analysis and commentary about the gold market that I believe offers accurate insight and is worth reading, published a detail report which outlines what appears to be the most bona fide estimate of the amount of gold that is being “absorbed” by China annually. While most of us have speculated on the size of the true amount of gold held by the PBOC, Mr. Macleod’s analysis puts together the numbers which show why the PBOC disclosure is misleadingly low.
The questions remain why, if gold is a mere ornamental asset being held out of “tradition” (per Bernanke’s testimony to Congress), are Central Banks so secretive about their gold market transactional activities? This of course is a purely rhetorical question…
I would urge everyone who is interested in seeking truth to spend time and carefully read Mr. Macleod’s analysis linked at the top. In that I’ve been researching and studying the gold market for nearly 14 years now, I can say with complete conviction that if Alisdair’s numbers are not 100% accurate, they’re pretty damn close to the truth.