Where Do We Stand in the Gold and Silver Markets?
irst I want to point out that the takedown in precious metals occurred exactly during the Chinese national holiday, also called the golden week, which started October 1th, 2016. During this week, the Shanghai Gold Exchange did not trade, which means that the largest physical gold market was closed.
The following chart shows monthly SGE gold withdrawals which equal monthly Chinese gold demand. The weekly gold withdrawals average 40 tonnes of gold demand. This is a significant number if you compare it to the gold ETF GLD which has an average trade of 20 tonnes/week. So we are seeing the effect of a closed Chinese gold market here.