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GFMS Q1 Update Confirms China As World’s No. 1 Gold Consumer

If one is happy to take GFMS figures as providing a consistent ranking on global gold demand figures (although some would dispute them) we should be able to rest the argument as to which country – China or India – was the world’s No. 1 gold consumer last year and, as we have said all along, China comes out on top. Unfortunately, not that it matters that much in the scheme of things, the world’s mainstream media keeps on insisting that India retook first place from China last year, and this is all down to the preliminary figures published by the World Gold Council (WGC) back in February in its first Gold Demand Trends report of the year (based on figures then also supplied by GFMS). It will be interesting to see if the WGC publishes a correction in its next Gold Demand Trends report due out in a couple of weeks’ time, and even if it does whether the mainstream media will even take notice but just continue to rely on the earlier figure. The February estimate seems to be set in stone by them.

But we take the publication of GFMS’s first quarterly update to its comprehensive Gold 2015 annual report on global gold supply and demand to confirm China’s continuing No. 1 position with no changes made to the full GFMS table of the world’s Top 20 Gold Consumers which we published around three weeks ago (See: Top 20 gold consumers: China still No. 1 – GFMS) so we assume GFMS is now confident in its 2014 figures and is not going to adjust them again.

As we have no doubt pointed out beforehand, Chinese consumption would have been streets ahead of that for India again last year if what is described as ‘bank activity’ was included – and also if Hong Kong’s consumption was lumped together with that of the Chinese mainland – after all Hong Kong is officially an integral part of China, although classed separately in trade figures as a Special Economic Region. GFMS does note that Chinese imports of gold, and deliveries from the Shanghai Gold Exchange (SGE) considerably exceeded the quoted consumption figure owing to growth in gold leasing, increased holdings by commercial banks to back paper products (a legal requirement) and perhaps some double counting of gold due to round-tripping to Hong Kong.

Altogether the 20 nations included in the global Top 20 table account for almost 85% of total global gold consumption and, interestingly, no less than 13 of them can be classified as being in Asia and the Middle East with China and India between them accounting for 47.3% of GFMS calculated global consumption. (But again this would be sharply higher if banking activity were to be included. After all gold being imported by Chinese banks should also probably classify as consumption by our reckoning – it is certainly a major contributor to West-to-East gold flows.GFMS Q1 also includes another fascinating table showing the Top 20 gold consuming nations on a per capita consumption basis. While India squeaks into this listing at No. 19 with a per capita gold consumption of 0.69 grams per head, mainland China doesn’t even make the Top 20. This suggests that there is the potential for a huge percentage increase in gold consumption in both these nations as per capita wealth grows given the extremely strong penchant in both countries for individuals to purchase gold as investment, jewellery or in festival-related trinkets.

This tabulation is set out below:

Top 20 Countries by per capita gold consumption



Per capita consumption (grams)








Hong Kong









Saudi Arabia
























S. Korea




















Source Thomson Reuters, GFMS

Hong Kong does feature high on the list but its per capita figure is boosted by those from mainland China who come in to buy their gold in Hong Kong. If we were to lump Hong Kong in with mainland China, China would probably just make the Top 20 list!  Even so there is still a long way to go in potential gold purchasing as personal wealth continues to grow. China’s GDP growth may currently be advancing at a slower rate than over most of the past decade, but it is still rising at a rate far in excess of that of any major Western economy.

Given the GFMS Q1 update follows so closely on the initial publication of the full report only three weeks ago, there was unlikely to be much in the way of new information – we will have to wait for the later quarterly updates to see if any real trends are yet emerging. Even so, the consultancy does suggest Chinese demand in Q1 may have weakened, although this would seem to be contradicted by SGE withdrawals which were at a new record level in Q1 (See: SGE Q1 gold withdrawals at new record – ca. 623 tonnes). GFMS puts any weakness it sees as down to the buoyancy of the Chinese stock markets helping subdue domestic gold purchases and reckons that retail gold investment was down by 10.5% year-on-year in Q1. It also notes that gold content in jewellery demand appears to have dropped by 12.4%, with 18-carat material outperforming 24-carat.

On the other major gold consumer, India, GFMS notes that Indian jewellery demand was hindered by heavy rains in the first quarter, with jewellery offtake rising by just 2% year-on-year and investment demand slumping by 31% to its weakest level since 2009. Falling local premia are impinging heavily on the hand-carry trade from sources such as Dubai. Interestingly physical demand in the world’s No. 3 consumer, the US was reckoned to be down by 6% to the lowest Q1 level since 2007 and global jewellery demand was seen as down 6.7% year-on-year.

On its gold price forecasts for the year, GFMS has not changed its viewpoint.  Rhona O’Connell who heads up the GFMS team (long-term Mineweb readers may recall that Rhona was our principal commodities correspondent in the time ahead of the Thomson Reuters take-over of GFMS) notes on this that “The next move in the gold price is likely to be the result of a complex interplay between competing asset classes. In the short term the price remains under some pressure, but any approach towards $1,100 will be constrained by a growing demand side response.  This is compounded by strong technical support around the $1,130 and $1,100 levels. Further out, clarification of the timing of the first rate hike in the US will remove a degree of uncertainty from the markets and is likely to trigger the start of a secular, but gentle, bull run in the gold price as investors implement fresh strategies, aided by improving gold market fundamentals”.

What this means effectively is that the GFMS average gold price forecast for the year remains at $1,170 an ounce (compared with a Reuters News poll of market participants of $1,206 an ounce), but it does see prices rising by Q4 after perhaps a degree of weakness in Q2 and Q3.


Courtesy of

Lawrence (Lawrie) Williams has been involved with both the technical and the financial end of the mining sector for over 40 years, formerly CEO of top mining industry business publisher, Mining Journal Limited, he was Mineweb's General Manager and Editorial Director up until October 2012 and is now Consultant Editor. He has worked as a mining engineer on gold, platinum, uranium and copper mining operations.

A medical study in France during the early twentieth century suggests that gold is an effective treatment for rheumatoid arthritis.
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