Almost each day marks another record high in Shanghai gold premiums to London spot price. We have hit 3% premiums.
They are really gobbling up the gold, that I can say.
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| Chart 1: Shanghai Gold Premium |
Showing posts with label premium. Show all posts
Showing posts with label premium. Show all posts
Wednesday, 3 July 2013
Wednesday, 26 June 2013
As a follow up on Eric Sprott's bullish call on gold here, let's see what has happened ever since.
His premise was that hedge funds take possession of their physical gold of the GLD trust, because there isn't any other gold available. As they take possession of this physical gold, they are going to sell it to China who give huge premiums on this physical gold (around 3%).
Following chart indeed says to us that hedge funds are still taking possession of their GLD trust units. The GLD now only has 969 tonnes of physical gold left. The question is now, how much physical gold does GLD really have? If someone knows, please tell me. But we have another way we can look at it, by just looking at how much registered gold there is on the COMEX.
If we look at the COMEX warehouses, registered gold (which represents 40 tonnes physical gold) is declining (blue chart on Chart 2). Total stock is declining too (around 200 tonnes). When these charts hit zero, there is no gold anymore at the COMEX and we will see defaults. The gold exchange will become a cash exchange.
Once the blue line intersects with zero, bad things will happen because no physical gold is available at the COMEX. I guess that when the blue line intersects, there is a chance GLD could blow up as people scramble to get physical gold at the GLD trust.
Jim Sinclair confirms:
His premise was that hedge funds take possession of their physical gold of the GLD trust, because there isn't any other gold available. As they take possession of this physical gold, they are going to sell it to China who give huge premiums on this physical gold (around 3%).
Following chart indeed says to us that hedge funds are still taking possession of their GLD trust units. The GLD now only has 969 tonnes of physical gold left. The question is now, how much physical gold does GLD really have? If someone knows, please tell me. But we have another way we can look at it, by just looking at how much registered gold there is on the COMEX.
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| Chart 1: GLD |
If we look at the COMEX warehouses, registered gold (which represents 40 tonnes physical gold) is declining (blue chart on Chart 2). Total stock is declining too (around 200 tonnes). When these charts hit zero, there is no gold anymore at the COMEX and we will see defaults. The gold exchange will become a cash exchange.
Once the blue line intersects with zero, bad things will happen because no physical gold is available at the COMEX. I guess that when the blue line intersects, there is a chance GLD could blow up as people scramble to get physical gold at the GLD trust.
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| Chart 2: COMEX |
Jim Sinclair confirms:
As long as physical gold remains at a premium above future that is above the cost of insurance and transportation, the lower the inventory of gold at the COMEX goes. A futures exchange without a warehouse inventory becomes a cash exchange. This is the emancipation of physical gold from the manipulative capacity of No-Gold, Paper - Gold
Now let's see how this translates into the premiums on the Shanghai Gold Exchange.
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| Chart 3: Shanghai Gold Premium |
As you can see on Chart 3, the premium has never been as high since I monitored it. We are at 2.8% now.
So investors are taking the opportunity to make arbitrage profits by buying gold from GLD and selling it to China at a premium.
Let's see how long this can go on.
On the silver front, premiums have almost skyrocketed to 40% for some miners.
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| Chart 4: First Majestic Silver premium |
Sunday, 23 June 2013
Thursday, 13 June 2013
Thursday, 23 May 2013
One of the most important features of this blog is that you get real time alerts on important data.
One of those data is the premium I see on the Shanghai precious metals market. And today we see a huge increase in premium in gold (Chart 2). Gold premiums to London bullion price have reached 2.6%, the highest since I monitored it. Silver premiums also shot up to 3.8% (Chart 1).
That's a bullish sign.
James Turk talked about these huge premiums in Asia:
The huge premiums over spot in Asia and the long delivery times in London clearly show that this takedown in gold over the past few weeks was all about what was taking place in the paper market.  |
| Chart 1: Silver Premium Shanghai to London |
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| Chart 2: Gold Premium Shanghai to London |
Monday, 20 May 2013
As the paper silver keeps falling (blue chart), some miners aren't willing to reduce their selling price (red chart) on their silver bullion.
This lead to a huge disconnect between paper and physical silver of $5.5/ounce, or a 25% premium!
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| Chart 1: Disconnect between Physical Silver and Paper Silver at First Majestic Silver Corp |
Tuesday, 16 April 2013
Monday, 15 April 2013
With the 10% smackdown of silver today, the premiums on junk silver skyrocketed to 25% (Chart 1). The disconnect between the physical market and the futures market is reality. The 10% drop in the futures market coincides with a 10% rise in the premium. That means that the physical market is completely ignoring the futures market right now.
APMEX premiums skyrocket to 20% (Chart 3).
EDIT: and now they are out of stock:
Some of the junk silver bags are even sold out on APMEX.
EDIT: now the bags are all sold out.
EDIT 2: now all 90% junk silver bags on APMEX are out of stock.
EDIT: now the bags are all sold out.
EDIT 2: now all 90% junk silver bags on APMEX are out of stock.
The premium on the First Majestic Silver shop on silver jumped to 25% too.
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| Chart 2: First Majestic Silver premium on silver |
APMEX premiums skyrocket to 20% (Chart 3).
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| Chart 3: APMEX Silver Premium |
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| Figure 1: Silver American Eagle out of stock |
Meanwhile, Shanghai silver premiums are going to a high of 5% (since I monitored it) and 1% for gold.
I don't think these premiums are sustainable at all.
I don't think these premiums are sustainable at all.
Sunday, 14 April 2013
Junk silver is the key to watch these days. So what is junk silver? These are coins with silver in it ranging from 35% to 90%. But mostly we are referring to the 90% silver bags. On APMEX you can buy these 90% silver bags here: http://www.apmex.com/Category/17/90_Silver_Generic_Bags.aspx
Now what was the premium historically on these 90% silver coins?
In 2008, when we saw a collapse in gold and silver, the premium on junk silver went from a discount of $0.67/ounce or -4% to spot price to a premium of $3.81/ounce or 41% premium (Chart 1). This happened because the silver price was so cheap at that moment. Nobody was able to buy junk silver from the market without waiting several months. So that's why the premiums were so high. We all know what happened in the years after this take-down, silver skyrocketed to new highs of $50/ounce.
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| Chart 1: 90% silver US coins premiums historically |
Miles Franklin posts on his website that junk silver premiums went positive last winter (Chart 2). This is comparable to the winter of 2008. On APMEX, the premium is already at 15% if you buy via Check or Wire Transfer. If we see the silver price fall even further, this premium could go up significantly and possibly go to 2008 highs of 41%. And we all know what that means: shortages and a higher silver price. Silver went from $10/ounce to $50/ounce in the years after 2008 because of a shortage. Today, silver would need to go from $25/ounce to $100/ounce by 2015 just to be comparable to 2008.
Keep watching the junk silver premium. You will know when it is time to buy silver, when premiums go to 41%. That's the moment where the physical market is ignoring the futures market. The physical market will set the price of the futures market as bullion is transferred from the futures market warehouses to the physical hands.
Saturday, 13 April 2013
Thursday, 11 April 2013
Thursday, 4 April 2013
As BrotherJohnF reports here, scrap silver (dimes), have reached a 3 dollar premium over spot. He says this is a very high premium.
I don't know the history, but this sounds very interesting to monitor.
That's why I'm starting to monitor the scrap silver premiums too. Today, they are at 11%. Normally they are at spot price.
I don't know the history, but this sounds very interesting to monitor.
That's why I'm starting to monitor the scrap silver premiums too. Today, they are at 11%. Normally they are at spot price.
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| Chart 1: APMEX junk silver premium |
Thursday, 28 March 2013
Tuesday, 19 March 2013
This data was lost, but as you can see here, by just adding a few data points, it can still give us a good idea of the trend.
Wednesday, 13 March 2013
There is a potential for a new correlation here. Shanghai Silver Premium Vs. Silver Price.
The premise is that when Shanghai silver premiums are high (against London Silver Prices), then we hit a bottom in the silver price.
Let's see if this correlation makes sense, I need more data points.
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| Chart 1: Silver Premium Shanghai Vs. London |
Sunday, 10 March 2013
I have a small warning here for the COMEX stock.
I predicted that the total gold stock would come down here. That's because I saw a very high surge in registered gold from J.P. Morgan's vault. And several months later the total gold stock hit new lows (Chart 1).
There is a tight gold market right now, as we see lease rates go above 0%. GOFO rates are still at record lows and premiums are highest ever. APMEX premium on silver coins just went to the highest level on Friday, namely 18%.
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| Chart 1: COMEX gold |
A new thing has happened now in the silver COMEX stock. For the first time this year, we see the eligible silver stock go down. I also see that the registered silver went up, probably the same that has happened with gold. So I expect that total silver will now start to go down and we will see tightness in the silver market. We also see that the commercial shorts have finally covered their shorts.
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| Chart 2: COMEX silver |
Thursday, 28 February 2013
Just wanted to give a status update on the premiums.
The trend in premiums is still in an upward phase. A little side note, the bitcoin price has skyrocketed and continues to do so.
Thursday, 21 February 2013
Monday, 18 February 2013
There is a lot of hope that Asia, when it opened this week after the lunar holiday, would normalize the precious metals market. And indeed, my chart tells me the demand is there.
Premiums on silver between Shanghai and London keep rising (Chart 1).
Sunday, 3 February 2013
He who searches, will find what he's searching for (or something like that).
In a previous post here, I noticed that the silver prices between Shanghai and London were decoupling, with premiums as high as 10%. I didn't know where to find this Shanghai Exchange silver price.
But today I think I found the site that gives these gold and silver prices (for free).
You can find it on Bloomberg:
And when Bloomberg restricts access to their site, you can find it here: http://www.sge.sh/publish/sgeen/sge_price/sge_price_daily/9550.htm
Gold for example: On February 1 the Shanghai gold price was: 334.63 RMB/g. Which is 39339 Euro/Kg at 8.506 EUR/CNY. The London price of gold on 1 February 2013 was 39297 Euro/Kg. So the premium was 0.1% (which is normal because there shouldn't be a premium).
Silver for example: On 21 December 2012 the Shanghai silver price was: 6.277 RMB/g. Which is 760.8 Euro/Kg at 8.25 EUR/CNY. The London price of silver on 21 December 2012 was $29.89/ounce or 22.61 euro/ounce at 1.322 EUR/USD. That's 726.9 Euro/Kg or indeed a 5% premium as was reported by Andrew Maguire.
This also means that I'm going to monitor the Shanghai Silver and Gold premiums to London market with this data on a daily basis!
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