Tag Archives: SGE premiums

Chinese Gold Demand Down From Q1, 751 MT YTD

In week 20 (12-05-2014/16-05-2014) gold withdrawals from the Shanghai Gold Exchange vaults, which equals Chinese gold demand, accounted for 30 metric tonnes. 8 tonnes below the year to date average. Although 30 tonnes of demand in one week is not particular low, it seems the Chinese are taking a break from their exceptional strong buying in 2013 and in the first quarter of 2014. From Chinese state TV network CCTV:

I hope to have more information on the potential alliance between the Shanghai Gold Exchange and the Chinese Gold and Silver Exchange, which is based in Hong Kong, in the near future.

The SGE silver premium, as measured by the price of SGE’s most liquid contract Ag(T+D) compared to the COMEX price, stood at 5.4 % on May 16. On that day total SGE silver inventory stood at 76 tonnes.

Shanghai Gold Exchange silver premium

Total silver inventory at the Shanghai Futures Exchange (SHFE), that only has vaults in Shanghai, was 228 tonnes on May 23. Down 954 tonnes from 1182 tonnes on February 8, 2013.

Currently a few silver futures contracts on the SHFE  are in backwardation, for example the December 2014 contract.

SHFE silver backwardation may 23, 2014
Note, the open interest on the SHFE is counted bilaterally, different than from COMEX. For the December 2014 contract there are 209125 longs and 209125 shorts.

On the SHFE the closing silver price on May 23 (of the first delivery month) was 4139 yuan per kilogram. On the South Rare Precious Metals Exchange (SRPME), that has vaults in Hechi, Chenzou and Yingtan, it was 4074 yuan per kilogram. The SGE’s Ag(T+D) contract closed at 4114 yuan per kilogram. The spread between the SRPME and the SHFE has been significantly reduced in the last 10 days.   

Map Chinese silver vaults 

Overview Shanghai Gold Exchange data 2014 week 20

– 30 metric tonnes withdrawn in week 20 (12-5-2014/16-5-2014)

– w/w + 6.95  %

– 751 metric tonnes withdrawn year to date.

My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information read this.

Shanghai Gold Exchange withdrawals 2014 week 20

This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.

Shanghai Gold Exchange withdrawals week 20 2014

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

Shanghai Gold Exchange gold premiums 2013 2014 week 20

Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

Shanghai Gold Exchange gold premiums 2014 week 19 and 20

 

SGE Withdrawals 29 MT In Week 16, YTD 635 MT

From April 14 to 18, week 16, 29 metric tonnes of gold were withdrawn from the vaults of the Shanghai Gold Exchange. In week 15 it was  21 tonnes, so demand, which equals SGE withdrawals, is slightly picking up. Although it’s nowhere near the figures we saw in the beginning of this year, when there were four weeks when SGE withdrawals transcended global mining production. Lets’ put some weekly numbers in perspective.

2197 tonnes were withdrawn in total in 2013, which was an average of 42.25 tonnes (2197/52) per week. The year to date weekly average is 39.68 tonnes, heading for 2036 tonnes in total in 2014 – though I think it’s impossible to make a fair estimate for this year’s total. The price of gold could be heading lower sparking another buying spree as happened in April 2013, or the price could go higher, possibly slowing down global gold distribution and SGE withdrawals.

However, in my opinion it’s unlikely withdrawals will stay below 35 tonnes a week at current prices. If we look at the six months period before April 2013, the weekly SGE withdrawal average was 34 tonnes, while the price of gold hovered around $1700 back then. I can’t think of any reason why the Chinese would buy less gold, the precious metal they recognize for its true value, when gold is dirt cheap at $1300. One reason that certainly would dampen SGE withdrawals would be western supply running dry – most of Chinese gold demand is supplied by imports – but from looking at SGE premiums this is not the case yet, as premiums have been negative/zero since weeks.

Overview Shanghai Gold Exchange data 2014 week 16

– 29 metric tonnes withdrawn in week 16 (14-04-2014/18-04-2014)

– w/w + 35.22  %

– 635 metric tonnes withdrawn year to date, + 10 % year to date.

My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information read this.

Shanghai Gold Exchange withdrawals 2014 week 16

This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.

Shanghai Gold Exchange withdrawals week 16 2014

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

Shanghai Gold Exchange premiums week 16 2014

Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

SGE premiums week 15 and 16 2014

In Gold We trust

Chinese Gold Demand Dropping

It has been a bit silent on In Gold We Trust for a few days as I was working on moving this website to a new server, which didn’t happen as planned. Yesterday the website has been offline for hours due to transition. I was forced to move because the old server couldn’t handle the repeated DDoS attacks, the new one is supposed to be better armed providing visitors, finally, stable and faster access.

Anyway, I still owe you guys un update on withdrawal numbers from the SGE, published last friday April 18. SGE withdrawals, which equal Chinese wholesale demand, in week 15 (08-04-2014/11-04-2014) accounted for 21 metric tonnes. A lot of gold but the lowest numbers since March 2013 – also due to the fact the SGE was closed on April 7, leaving only four days of trading in week 15. Nonetheless, demand has been in a downtrend for six weeks in Shanghai and premiums have been sub zero since late February, which doesn’t hint at a supply shortage on the SGE. At the same time we saw GOFO rates being negative in week 15 in western markets, which does hint at supply shortages. This situation illustrates the PBOC’s gold policy; gold is allowed to be imported but not exported.

GOFO 2013 - 2014

Overview Shanghai Gold Exchange data 2014 week 15

– 21 metric tonnes withdrawn in week 15 (08-04-2014/11-04-2014)

– w/w – 16.7 %

– 606 metric tonnes withdrawn year to date

My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information read this.

Shanghai Gold Exchange withdrawals 2014 week 15

This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.

SGE withdrawals

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

SGE premiums

Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

SGE premiums