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.
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.
Shanghai Discount/Premium to Spot on 7/23/21 @ 10:15 AM EST: 0.01%
Shanghai Discount to Physical on 7/23/21 @ 10:15 AM EST: -7.29%
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.