Singapore Bullion Market Association

Website Sponsor

Article List

Article List

Gold’s Rush to the East

By Ronald-peter Stöferle, Managing Partner, Incrementum AG

When one considers the world’s leading gold market hubs, London, New York and Zurich often come to mind. However, the global political order is undergoing a major readjustment, and so too is the global gold market. Gold flows and consequently, the global gold market, is increasingly shifting from the West to the East, as succinctly put by James Steel, “Gold goes where the money is”.

Demand From the East

Central banks in Eastern countries have emerged as strong gold buyers, even surpassing some of their Western counterparts. This is also reflected in the continuing enthusiasm of central banks for gold, especially among non-Western countries. In 2022, central banks made their largest purchases of gold since records began more than 70 years ago, acquiring a total of 1,136 tonnes. This trend continued into the first three quarters of 2023, with central banks increasing their gold reserves by a total of 800 tonnes – a 14% increase over the previous year. China led the way in purchases, followed by Poland, Singapore, Libya, India, and the Czech Republic. So even in the West, it was countries in the East that made significant purchases.

To illustrate the shift in institutional gold demand to the East, consider the cumulative gold sales of Western central banks compared to the cumulative gold purchases of the Shanghai Cooperation Organization (SCO) since 2001.

Central Bank Gold Reserves, in Tonnes, Q2/2001 – Q3/2023

World Gold Council, Incrementum AG
Source: World Gold Council, Incrementum AG

Looking at the BRICS, we also see a striking overlap, with central banks from four of the five BRICS countries – Brazil, Russia, India and China – collectively acquiring 2,932 tonnes of gold between 2010 and 2022.

Growing Infrastructure for Gold Trading

The East is not only amassing gold but mining gold itself on a large scale. China and Russia have ranked among the top three gold producing nations for years.

Countries such as China, the United Arab Emirates and even Russia are expanding their gold trading infrastructure, aiming to establish a self-sustained infrastructure for gold trading, reducing reliance on trading centres in the West, such as London, New York and Zurich. This shift reflects a changing perspective, with the East increasingly taking on the role of a provider of infrastructure rather than solely a customer.

Key developments include:

  • SGE & SFO NRA: Cooperation between the Chinese and Russian gold markets

    China and Russia have been working to connect their gold markets through cooperation between the Shanghai Gold Exchange (SGE) and the Russian National Financial Association (NFA), a professional association representing the entire Russian financial sector, including its precious metals market.

    In the face of Western sanctions, Russian gold exports to China have already surged since mid-2022. With three Russian banks – VTB, Sberbank and Otkritie – already members of the SGE International Board, this cooperation between is set to intensify.

AS EASTERN GOLD MARKETS GAIN PROMINENCE, THEY ARE OBTAINING GREATER REPRESENTATION AND INFLUENCE IN GLOBAL INSTITUTIONS LIKE THE LBMA AND THE WORLD GOLD COUNCIL (WGC).

  • Memberships in gold-related institutions

    As Eastern gold markets gain prominence, they are obtaining greater representation and influence in global institutions like the LBMA and the World Gold Council (WGC). Chinese refineries and gold producers have increased their presence in these organizations, signaling their growing influence.

    In 2009, only six Chinese refineries were on the LBMA’s Good Delivery List, but now there are thirteen. While just 15 years ago there was only one regular (full) member of the LBMA from China, the Bank of China, there are now seven. China’s growing influence is also reflected in the World Gold Council. In February 2009, only one Chinese gold producer was a member of the WGC; now there are four

  • India International Bullion Exchange (IIBX)

    In addition to its sophisticated OTC gold trading market, India has also established a trading infrastructure for gold futures contracts on the country’s Multi Commodity Exchange (MCX). In July 2022, the India International Bullion Exchange (IIBX), supported by the Indian government, was officially opened for trading spot gold contracts backed by physical metal. IIBX is located in a special economic zone in GIFT City in the Indian state of Gujarat, and the gold underlying the contracts is stored there. One goal of IIBX is to allow qualified buyers to import gold directly into India without the need for banks or authorized agencies. So far, however, trading volumes have been minimal.

Private Gold Demand Shifts to the East

The surge in interest in gold is also visible among private consumers in the East. Chinese consumer demand, for example, increased by 181% from 292.6 tonnes at the turn of the millennium to 824.9 tonnes in 2022. Annual consumer demand in India has also increased during this period, albeit from an already high level in 2000.

China and India, which together accounted for 28.7% of consumer demand in 2000, accounted for almost half of global consumer demand (48.4%) in 2022 and together acquired 1,600 tonnes of gold last year. This shift underscores the East’s growing attraction to gold as an investment and wealth preservation asset.

Consumer Demand for Gold – 2000 vs. 2022

2000 % of Global Demand 2022 in Tonnes % of Global Demand 2022 vs. 2000 in Tonnes 2022 vs. 2000 in %
India 723 20.40% 774 23.40% 50 7.00%
China 292.6 8.30% 824.9 25% 532.3 181.90%
Japan 105.1 3.00% 4.3 0.10% -100.8 -95.90%
Middle East 457.9 12.90% 268.2 8.10% -189.7 -41.40%
Türkiye 177.4 5.00% 121.5 3.70% -55.9 -31.50%
United States 368.5 10.40% 256.6 7.80% -111.9 -30.40%
France 19 0.50% 19.9 0.60% 0.9 4.50%
Germany 15.6 0.40% 196.4 5.90% 180.8 1,159%
Italy 92.1 2.60% 17.8 0.50% -74.3 -80.60%
UK 75 2.10% 35.6 1.10% -39.4 -52.50%
Rest of Europe 142.4 4.00% 115.1 3.50% -27.3 -19.20%
Other 1,076.0 30.40% 669.1 20.30% -406.9 -37.80%
Global Demand 3,544.6 100.00% 3,303.3 100.00% -241.3 -6.80%
Source: World Gold Council, Incrementum AG

Recent developments point in the same direction. In the first eight months of 2023, Asian gold ETFs increased their holdings by 7.7%, while North America and Europe recorded outflows of 2.3% and 6.1%, respectively. Significantly, in the bars and coins demand segment, Turkey and Iran replaced Germany and Switzerland in the top five in the first half of the year. China now leads this sub-segment of gold demand – in the first half of 2022, Germany was still in the lead – followed by Turkey, the US, India and Iran. This is because while demand for bars and coins in Turkey shot up from 9.5 tonnes to 47.6 tonnes in the second quarter of 2023, it fell by around three quarters in Germany.

Growing Price of Gold in Eastern Currencies

Furthermore, the price of gold in Eastern currencies has risen significantly, demonstrating its value-preserving properties in challenging geopolitical and macroeconomic environments. As of the end of October, gold was 23.3% higher in Indian rupees than at the beginning of 2022, 26.9% higher in Chinese renminbi and 29.1% higher in South African rand (all left-hand side), while in Russian rubles gold increased by 39% and by 137.2% in Turkish lira (right-hand side). In comparison, gold in US dollars rose by 8.5% compared to the start of 2022.

Gold in TRY and RUB (lhs), and in INR, CNY and ZAR (rhs), 100 = 01/01/2022, 01/2022-10/2023

Reuters Eikon, Incrementum AG
Source: Reuters Eikon, Incrementum AG

Moreover, the significantly increased premium on the gold price in China since July is an unmistakable sign that there is a structural shortage of gold in the Chinese market and thus an expression of the strong demand for gold in the Middle Kingdom. This is likely to be related to the country’s ongoing economic problems, especially in the real estate sector, which was hitherto of great importance for retirement provision.

Summary

This shift in demand from West to East extends beyond governments or governmentrelated entities to include institutional and private investors. Gold is flowing to where it is most valued and where economic prosperity and savings rates have increased. In the medium term, the shift in demand should therefore find support from the higher growth prospects in Asia and the Middle East.

“Ohne Geld, ka Musi” (“Without money, no music”) – this is how the vernacular formulates this economic truism in German. With the IMF’s most recent economic forecast indicating stronger growth in emerging and developing Asia compared to the West, the influence on gold pricing is likely to shift from West to East.

RONALD-PETER STÖFERLE CMT

RONALD-PETER STÖFERLE CMT is managing partner of Incrementum AG, responsible for research and portfolio management. With a background in business administration and finance, he started his career at Erste Group, where in 2007 he published his first “In Gold We Trust” report. He serves on the boards of Tudor Gold Corp. (TUD), and Goldstorm Metals Corp. (GSTM), and advises Matterhorn Asset Management. He co-authored the international bestseller Austrian School for Investors (2014) and The Zero Interest Trap (2019).

PREV ARTICLE
NEXT ARTICLE
Back to Index

Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

SBMA Secretariat-Fabian-Lew

Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

SBMA-margare-secretariat

Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

SBMA-Albert-secretariat

Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

SBMA Committee-Photo-Kazuya-Naoki

Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.