Graph start date is 4/1/20.
NOTE: The Shanghai price has been shifted back one day in order to account for the fact that it is 13 hours ahead of EST.
From what I can tell, the Shanghai price has not varied very much from the Spot price since I started keeping records on April 1, 2020. This suggests to me that the system has not totally collapsed yet.
However, if you focus just on the premium/discount percentage, the clear trend is toward a narrowing discount. The 30-day moving average (red) shows that the Shanghai discount to Spot has been getting smaller since I started keeping records. The discount hit a low on 8/11/20 of -6.62%. However, since 1/11/21 the Shanghai price has been at almost a continuous premium to Spot (except for early June – see below).
UPDATE 6/9/21: For the past three sessions, the Shanghai price has been at a pretty steep discount to Spot (although the discount has been getting smaller and smaller). This is counter to the steady trend premium since early in 2021. By 6/11/21 Shanghai went back to a premium to spot. Since then it has continued to fluctuate between discount and premium. Interestingly, the Shanghai discount to Physical Gold has been getting smaller and smaller since the beginning of July (see chart below):
UPDATE 9/8/21: The Shanghai Premium to Spot Price is at the second highest level since I started recording this information: 1.62%. The highest discount before this was on 6/16/21 when it hit 1.86%. Also interesting is that the Shanghai Discount to Physical is at the absolute lowest since I began this chart: – 4.64%.
UPDATE 9/17/21: The Shanghai Premium to Spot Price is at the highest level since I started recording this information: 2.38%. Also interesting is that the Shanghai Discount to Physical is at the absolute lowest since I began this chart: -3.66%.
Shanghai Discount/Premium to Spot on 10/21/21 @ 7:10 PM EST: -0.07%
Shanghai Discount to Physical on 10/21/21 @ 7:10 PM EST: -7.30%.
Another potential warning sign of something going on in the gold market might be found in the spread between the AM and PM prices in the Shanghai fix. A wider spread clearly indicates a volatile market for gold. Below is a chart which traces this spread starting 4/1/20. So far, the 30 period moving average (in red) shows that the spread has been pretty steady, hovering near the 0% line. My guess is that if the spread trends positive for an extended period, this could mean that the price of gold is strengthening – but I am not convinced yet that this spread has any value.
- The Shanghai price is taken from Kitco and is an average of the AM and PM price fix.
- The Spot price is taken from Goldprice.org and is an average of all of the spot prices that I captured over the course of the day.
- The Physical price is taken from Ebay.com and is also an average of all of the prices I recorded during the course of the day.