China's Demand For Physical Quadruples Gold Premium

Tyler Durden's picture


The premium that gold buyers in China pay to take immediate delivery of bullion has jumped four-fold in the last six weeks following the gold price 'crash'. As Bloomberg notes, even before the mid-April drop, China's gold imports jumped to a record in the first quarter as domestic demand (776 tons) outweighed domestic supply (403 tons). Images of consumers overwhelming jewelry shops were everywhere but the following chart clarifies just what the suspected gold manipulation did for demand as China's gold premium, while admittedly noisy, jumped from a long-run average of around $7 to over $32! As one analyst notes, the gold "premium is a function of demand and supply, and right now you could interpret the high premium in Shanghai as a sweetener to entice the overseas gold supply to flow into China."



Source: Bloomberg Chart of the Day

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Sun, 06/02/2013 - 16:32 | 3618681 IridiumRebel
IridiumRebel's picture

COMEX holdings of phyzz still dwindling? Dollar being left to die? Asians/BRICs still swapping and stacking outside the ol USA?
Yep. It'll be strange in 10 years when they own it all. I guess they could call LA New Beijing.

Sun, 06/02/2013 - 16:43 | 3618713 SRSrocco
SRSrocco's picture

Looks like TEXAS might be the first state to allow TAX FREE EXEMPTION for gold and silver:

Can Texas become 1st tax free Gold state?

Sun, 06/02/2013 - 17:01 | 3618732 akak
akak's picture

Since Alaska has no statewide sales tax, ALL gold and silver purchases here are and have been tax free.  I suspect the same is true in the handful of other states without statewide sales taxes as well.  So while an important development, this story is not quite factual as presented.

PS: Thank you for all your efforts and work on the PM front, SRSrocco!

Sun, 06/02/2013 - 17:09 | 3618748 The Thunder Child
The Thunder Child's picture

No tax on the sale of Gold and Silver buillion in Canada, I would be thankful if I could manage to stop tipping the damn canoe....

Sun, 06/02/2013 - 17:12 | 3618756 Enslavethechild...
EnslavethechildrenforBen's picture


Mon, 06/03/2013 - 00:21 | 3619574 conork
conork's picture

The reason the spread increased so much is due to the price falling, the shop owners cant sell below spot so keep their prices'll tightenn up again

Wise words from Jim Rogers

Sun, 06/02/2013 - 17:22 | 3618767 seek
seek's picture

Bullion is sales tax exempt in many states, especially in investment quantity sizes.

We honestly shouldn't care much about sales taxes. What I care about is the exemption that matters: consider gold as a currency, and zero tax on gains relative to FRN. That's why the Utah and the veto'd Arizona tax changes are important.

Sun, 06/02/2013 - 21:41 | 3619255 PiratePawpaw
PiratePawpaw's picture

If only someone  could have foreseen that paper would become worthless and you only own it if you can hold it.........wait...nevermind.

Sun, 06/02/2013 - 22:10 | 3619310 akak
akak's picture

Hey Pirate, have you ever eaten a pawpaw?

They are absolutely delicious!  Too bad that efforts to cultivate and domesticate them have so far met with very little success.

Mon, 06/03/2013 - 10:54 | 3620191 Miffed Microbio...
Miffed Microbiologist's picture

You seem to have an affinity for uncultivatable fruits. Must be frustrating. Durian are probably cultivated. Such is the nature of this world.


Sun, 06/02/2013 - 20:48 | 3619152 DosZap
DosZap's picture

Looks like TEXAS might be the first state to allow TAX FREE EXEMPTION for gold and silver:


Always has been, most dealers never have charged the tax even under the 1k ceiling.

Sun, 06/02/2013 - 17:01 | 3618738 GeezerGeek
GeezerGeek's picture

It may be interesting watching the Chinese and the Mexicans battle for control of LA. Either way, I hope Cali is removed from the US roster of states. It would serve Pelosi/Feinstein/Boxer/Brown right.

Sun, 06/02/2013 - 17:01 | 3618740 tenpanhandle
tenpanhandle's picture

and Beijing will change name to Ca-Ching.

Sun, 06/02/2013 - 17:43 | 3618797 LoneCapitalist
LoneCapitalist's picture

Califirnia is rich in resources and has alot of beautiful ocean front. I dont want to lose California, just the liberals running it.

Sun, 06/02/2013 - 20:21 | 3619096 ApollyonDestroy
ApollyonDestroy's picture

along with all the useless hippies and mexicans living in it. good for nothing mooches they should all just die in a fire 

Sun, 06/02/2013 - 20:22 | 3619099 ApollyonDestroy
ApollyonDestroy's picture

along with all the worthless hippies and mexicans living in it. good for nothing mooches they should all just die in a fire 

Sun, 06/02/2013 - 16:29 | 3618682 gold mans sack
gold mans sack's picture

Real price discovery parting from the paper game, bitchez.

Sun, 06/02/2013 - 16:32 | 3618691 PontifexMaximus
PontifexMaximus's picture

And only from there

Sun, 06/02/2013 - 16:34 | 3618694 russwinter
russwinter's picture

Comex and Comittment of Traders in Gold Highest in a Decade.

The commercials are now net short just 59,221 contracts. On Sept. 11 of last year, commercials were net short 237,091 contracts, and at the peak nearly 290,000.

It gets even more glaring when one looks at the net short positions within the commercial’s secton of the report. The Big 4 is short 8.8 million ounces or 148% of the net commercial short position. The Big 4, which is basically JPM in my opinion, is short essentially alone with all the other commercials either out of the way or long. The “gold raptors” are smaller commercials and hold their largest net long position since Sept. 9, 2008.


Sun, 06/02/2013 - 16:39 | 3618704 debtor of last ...
debtor of last resort's picture

Is this a coordinated LCS thingy or physical shortage? I bet it's the first. We are in smart LCS territory, not in desperate LCS territory. In desperate LCS territory your order will be settled in cash through a repayment in fiat. Watch the premiums in silver. They will tell the story.

Sun, 06/02/2013 - 16:40 | 3618707 gimli
gimli's picture

Severe shortages of tungsten reported.

Sun, 06/02/2013 - 16:46 | 3618718 Peter Pan
Peter Pan's picture

Is that premium per oz?

Sun, 06/02/2013 - 16:51 | 3618723 debtor of last ...
debtor of last resort's picture

On silver?

Sun, 06/02/2013 - 17:05 | 3618747 q99x2
q99x2's picture

Arrest Greenspan, Bernanke, Blankfein and Dimon for selling off the US Gold Reserves. Arrest them before they die of old age.

Sun, 06/02/2013 - 18:05 | 3618754 The Thunder Child
The Thunder Child's picture

Good start but can we Bush and Clinton families....the list needs to be much bigger!


Sun, 06/02/2013 - 21:53 | 3619283 lakecity55
lakecity55's picture

Better be glad we do not have a Ft Knox of Silver, or they would have stolen that, too.


Sun, 06/02/2013 - 17:10 | 3618752 jubber
jubber's picture

so why the $35 fall Friday?

Sun, 06/02/2013 - 17:24 | 3618770 seek
seek's picture

Improvement in USD exchange rate, but more significantly a hit to make the monthly close number lower.

Sun, 06/02/2013 - 17:14 | 3618759 kindape
kindape's picture

seriously though $7 to #32 out of $1400 base is noticeable but its not like its $200 or something....people can still buy and sell pretty close to spot.

Sun, 06/02/2013 - 17:25 | 3618771 debtor of last ...
debtor of last resort's picture

Yep. Like i said, wake me up when the premium on silver one oz is $ 32.

$32 on gold is like providing Syrian rebels with teargas.

Sun, 06/02/2013 - 17:27 | 3618773 granolageek
granolageek's picture

New Hampshire for sure. Also no state income tax so no issue there. Texas trying to keep up with New England. Normal since 1845.


Sun, 06/02/2013 - 20:56 | 3619166 DosZap
DosZap's picture

New Hampshire for sure. Also no state income tax so no issue there. Texas trying to keep up with New England. Normal since 1845



Scuse me, Texas has never had a state income tax.And as I stated taxes on metals has been ignored, and under old law no taxes 1k and over.

Sun, 06/02/2013 - 17:39 | 3618791 Yen Cross
Yen Cross's picture

      Here's the state by state breakdown on P/M taxation. Sales Tax Laws | State by State Breakdown | The|Coinologist.


Sun, 06/02/2013 - 21:54 | 3619287 lakecity55
lakecity55's picture

YC, thanks for the link; I had not seen that site before.

Tons of information in one place.

Mon, 06/03/2013 - 00:48 | 3619596 Yen Cross
Yen Cross's picture

 Be well "Lake City". Thank you.

Sun, 06/02/2013 - 18:27 | 3618878 criticalreason
criticalreason's picture

how come the gold miners never get any of this premium? or dont they produce physical?

I often wonder if ZH has been captured by the bullion dealers?

Sun, 06/02/2013 - 19:59 | 3619055 BoNeSxxx
BoNeSxxx's picture

Interesting thought experiment (the Tylers, not the miners).  The miner underperformance has been a head scratcher for all of us.

Re the capture of ZH by the bullion banks, methinks not... the Tylers provide them ample prison raping.

Sun, 06/02/2013 - 20:04 | 3619067 oddjob
oddjob's picture

I guess your 3 weeks here is enough time to make that decision. Take a minute and look at the average realized sale price per ounce for most miiners and you will see they usually capture better than average spot prices per quarter.

Sun, 06/02/2013 - 19:57 | 3619051 Magnum
Magnum's picture

$35 premium for what quantity?

Sun, 06/02/2013 - 20:53 | 3619158 DosZap
DosZap's picture

$35 premium for what quantity?

Per ounce of gold, in bars most likely.

Don't we wish it was that cheap here in fiat?, esp Eagles.

Sun, 06/02/2013 - 20:05 | 3619059 ponzisaurus
ponzisaurus's picture

Meh.  Lets see whats happening in December.  PMs are a screamin steal at these prices but the slapdown is still pretty much intact and inventory is available. 


Sun, 06/02/2013 - 20:31 | 3619120 suicidalpsychologist
suicidalpsychologist's picture

if westerners stop reproducing and are collapsing economically , spiritually and socially they re simply going to get replaced/ bought by chinese. Chinese will probably replace russians, and eradicate muslims and blacks in africa once white people have been wiped.



Sun, 06/02/2013 - 20:48 | 3619150 oddjob
oddjob's picture

-1 for being an ignorant cunt.

Sun, 06/02/2013 - 20:54 | 3619159 Magnum
Magnum's picture

But $7 per ounce of gold is nothing.  Especially underscored Nothing when the price of gold is under $1400.  Wake me up when premium is $200.  

Sun, 06/02/2013 - 20:47 | 3619146 polak potrafi
polak potrafi's picture

You do not care

wether it's there

weather whenever

and where

oh... it is there



and dare




71 zer

Sun, 06/02/2013 - 21:36 | 3619245 WallowaMountainMan
WallowaMountainMan's picture


a bit more paper is getting the same amount of gold?



Sun, 06/02/2013 - 22:17 | 3619267 SqueekyFromm
SqueekyFromm's picture

Maybe this has something to do with all the supposedly empty gold shops in China, increased premiums, and miner strikes in South Africa. A Sekrit Source sent me these Wire intercepts between Wang Chung, Shanghai Gold Merchant to Neals Boer, South Afrika Bullion Unlimited:


To SABU: Hully! Send much gold before Amelicans wise up. Can Honorable Chung get gold now, and pay in 30 days at spot price then???

To Wank Chung: Voetsek! I was not born yesterday, draadtrekker. Who knows how far price will drop in a month. I have payrolls to make, fokkop.

To SABU: Honorable Chung buy now, and tomollow price is lower. Honorable Chung not stay in business that way. Me no stupid. Plus, name is WANG not Wank!!!

To Wang Chink: You wannee gold, you payee now. No tikkee, no goldee, Houtkop!

To SABU: You no insult Honorable Chung no more, yankee dog lackey! How we fix this? Me wanna sell gold to clazy Amelicans, but Gold Shop is empty because me can no afford buy gold with price dropping like poop raindrops. Plus, name is CHUNG not Chink!!!

To Wing Ching: Confucious say, Buy now. Let shop stay empty for a few days. Amelicans panic and price goes up. Increase premium. Win. Win.

I am not sure if these are real, or if somebody is pulling my leg, but I report, you decide.

Squeeky Fromm, Girl Reporter



Mon, 06/03/2013 - 00:21 | 3619572 Bansters-in-my-...
Bansters-in-my- feces's picture

You know what they say.....

She's so tight she Squeeks.

Mon, 06/03/2013 - 05:05 | 3619708 CHX
CHX's picture

Premium bitchez.

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