Simply look at the weekly withdrawals from Shanghai Gold Exchange vault.
This from Scotiabank's China specialist Na Li:
- Na's China Express – Measuring China's Gold Demand: Overnight data shows that China's net gold imports from Hong Kong dropped to 21.134 tonnes in August, the lowest level since May 2011 (Exhibit 1 below). This data point supports our view that China is still in a destocking stage for gold and our relatively cautious "market weight" call on gold from a China perspective. However, we do caution that investors should no longer regard China's net imports from Hong Kong as an accurate proxy for China's gold import demand. This is because gold is increasingly flowing into the Chinese market through Shanghai and even Beijing. To understand China's real physical gold demand, investors should simply look at the weekly withdrawals from Shanghai Gold Exchange vaults (Exhibit 2). We visited the Shanghai Gold Exchange (SGE) in May and talked to the senior executives of the exchange. After reviewing the exchange's trading mechanism, we are of the view that the weekly withdrawal figures provide a much more accurate data series that reflects China's aggregate wholesale demand in a timely way. This is because for tax purposes all gold imported into China and all gold produced within China must pass through the vaults once, and only once, before reaching jewellery makers, investors, industrial users, and consumers. Exhibit 2 presents the weekly withdrawals from SGE vaults by numbered week (each calendar year has 50 trading weeks). As the exhibit shows, in recent weeks China's wholesale gold demand has actually picked up slightly. This is in contrast to the Hong Kong import data. Overall, by mid-September, China's cumulative wholesale demand in 2014 was down 16.2% YOY. This decline is much milder than the Hong Kong import number implies.