(edited for clarity) "... I had dinner about a year or two ago with the head of Gold at HSBC and one of the things that he described — and most of the world's gold goes through HSBC, at some stage — looking at the gold in his vault ... despite the fact that China is the biggest producer - he never sees bars, with Chinese stamps on them ..."
Dominic Frisby, Author/Writer
THIS OBSERVATION IS SUPPORTED BY THE DATA WE HAVE ON RECORD.
In the database I found ZERO matches for Chinese-manufactured gold bars in the GLD records, and also extended the query to see if other vaults had any. I was mildly surprised to find NONE ... surprising because our current gold sample size includes data from not just HSBC London vault, but also Royal Canadian Mint and Via Mat (London, Hong Kong and Zurich). Worth mentioning that although our database is large, there are still some data sets we have not yet loaded (like the Julius Baer Precious Metals Fund data, for example) so the conclusion is not yet complete. If I do find some Chinese-Manufactured Gold Bars in subsequent data records I will update this post, but since GLD is the grand-daddy of all ETF's I expect the 'zero' result will likely extend to all other result sets. At time of writing, the current size of the WAREHOUSE_GOLD table is 34 million rows (also note our data does not comprehensively account for the entire vault contents - we are only able to reference what is provided in the bar lists we download).
So my test result currently confirms the statement from the interview - namely that the HSBC vault contains no Chinese gold bars. This seems to directly support the idea that China may be keeping the lion's share of gold output from their refineries, and is also consistent with FOFOA's ideas about China and Gold. Interesting - I had never noticed the absence of Chinese gold bars.
Using the same comparison, the Silver stories (like 'central banks stockpiling silver') do not receive such similar support, in fact it is the opposite. Chinese Refiners appear to have a lot of silver refining output and are more than happy to sell it on. Here is a stacked bar chart (sic) which shows the appearance of ETF-held Silver Bars of Chinese-refiner origin, plotted against 'DateFirstRecorded'. This data is an aggregate of all vaults and all funds from the current set of processed bar lists. Please note the date is only indicative of when we first saw that signature, not when the bar was manufactured i.e. the bulk of our records start in 2010, so that year appears to be the biggest.
Some other limit-of-reading errors exist which means the figures are not 100% accurate (feel free to ask in the comments) but it's just to demonstrate that the Chinese have been shipping a lot of silver! Silver bars minted/refined in China represent around 110 million ounces - approximately 19 % of total Silver bar records, second only to Russia.
I wanted to add that for GOLD, there is a large amount of gold ETF bars refined in Hong Kong, which may or may not be an obvious destination for the Chinese gold to get refined (I am not an expert on Hong Kong gold refineries, perhaps someone can contribute here). One might argue this is part of china since the handover in 1997. Anyway, here is what the same country breakdown looks like for Gold:
For Hong Kong, the 12% output (approx. 6,337,872 oz) consists of output from 3 main refineries: Johnson Matthey Hong Kong Limited (65% of total), Metalor Technologies (Hong Kong) Limited (34% of total) and Heraeus Ltd Hong Kong (2% of total). The thing to remember is that these guys have been refining for a while ... JMHK was LBMA accredited in 2001 link and Metalor HK have since taken over their operations, so that 12% could potentially represent about 11 years of refining - eventually we hope to catalog the ages of each bar so this picture would get clearer over time, but one of the patterns we notice is that bars tend to stay where they settle - there doesn't seem to be a lot of moving around after the initial refining. Charting 'how far from home' might make an interesting post one day.
As mentioned in the comments, I don't think (the Hong Kong aspect) really affects the main impetus of missing bars, since we know that Chinese refineries can (and do) produce LBMA-standard bars (see Goldbarsworldwide for an example of Zhongyuan Gold Smelter link) but we just don't see any of these bars in GLD. The LBMA has a list of LBMA-accreddited Chinese Refineries link. And again, just a reminder that this snapshot represents the CURRENT data we have. We're continually adding more to the database which allows to refine the picture and gives us more opportunity to connect the dots!
Big hello to Max's readership - also to answer a question from a comment in Max's discussion thread - you can see here that the amount of Russian-produced gold bars is also quite small by comparison - especially in comparison to their silver refining output. Again, I'm not an expert in Russian refineries so I have no idea where their bars go or whether they prefer to send their gold to Europe to get refined, but the data shows me that Russian gold bars only make up around 1% of all ETF-held bars.
[ Appendum 29th October 2012 ]
p.s. We have other articles about the database which looks at interesting things like Silver bars from SLV moving across into Goldmoney and Bullionvault link.
[ Additional Comment - 6th November 2012 ]
This article has been linked to by George Washington blog. I notice some articles are claiming 'for any vaults in the world' ... not correct. Our current sample size (which is stated in the article above) includes only data from GLD, SLV, PSLV, Perth Mint, BullionVault and Goldmoney only. We are adding more data - yet to come is the full set of MSL Securities, Julius Baer and a handful of others. It still remains possible that maybe some Chinese bars are founds later in THOSE vaults, and the likelihood increases the closer the vaults get to China, but we don't have bar lists from any Chinese ETF's!! If anyone knows of any, please let us know! However, generally speaking, GLD is the ETF equivalent of the planet Jupiter - the gravity well is so large it sweeps up all the bits and peices floating around. The presence of zero chinese-refined bars simply suggests those bars are not free to move around. This is in direct contrast to what we see in SLV which operates in the same fashion. Regards, Warren
[ UPDATE 20-Nov-2012 - The hunt for Chinese-refined 400oz gold bars continues, in this article: "Chasing Chinese Bars" - synopsis, we added Julius Baer data and found none again - we also have a closer look at the Hong Kong question and others. ]