Shanghai Gold, Silver Volumes Surge To Records and Premiums Rise As Night Trading Begins

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Today’s AM fix was USD 1,275.00, EUR 976.79 and GBP 842.70 per ounce.
Yesterday’s AM fix [9] was USD 1,280.75, EUR 981.87 and GBP 848.91 per ounce.

Gold rose $34.30 or 2.74% yesterday and closed at $1,285.40/oz. Silver surged $1.03 or 5.38% and closed at $20.18.

[10]Gold in USD - 1 Week - (Bloomberg)

Gold is marginally lower today, but is up 3.8% this
week and on track for its biggest weekly gain since October 2011. There
has been a realisation that ultra loose monetary policies are set to
continue reigniting bullion's appeal as an important diversification.

Indian gold demand fell sharply and was down 70% in
June from May. The Indian government’s taxes and capital controls have
had the desired effect in the short term but at what cost and how
sustainable will their measures be?

China continues to be the elephant in the room which is being ignored
by the gold bears and Chinese gold demand continues at record levels
and is compensating for the sharp fall in Indian demand.

Very robust demand in China is seen in the fact that Hong Kong jewellers and banks [11]are having difficulty meeting demand and the rising premiums and record volumes on the Shanghai Gold Exchange (SGE).

Premiums on gold futures on the SGE yesterday closed at a $12.90 per
ounce over COMEX spot - COMEX at $1,283.30/oz and SGE at $1,296.30/oz.
Overnight the premium on the SGE rose sharply and is now at $35.94 -
COMEX at $1,275.30 and SGE at $1,311.14/oz (see ‘Gold Futures’ in table
below).

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Gold Prices/Fixes/Rates/Vols - (Bloomberg)

Trading volumes for gold and silver on the Shanghai Futures
Exchange (ShFE) jumped to record highs today a week after the bourse
launched after-hours trading, driven by a surge in investment and
hedging demand, according to Reuters [13].

[14]Cross Currency Table - (Bloomberg)
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The ShFE launched night trading on July 5 to give investors in the
world's second-largest gold importer, soon to be the largest gold
importer, a tool to manage risk and buy and sell gold and silver during
trading hours in London and New York as well as Chinese trading hours.
Weekly buy and sell trading volume for the most active gold contract
more than doubled from a week ago to 2.06 million lots as of Friday,
exchange data showed.

Daily transactions for gold rose to a record of
595,642 lots on Thursday, compared to an average of 483,529 lots in
June, the data showed.

Daily volume for the silver contract rose roughly six fold from a week ago to 2.23 million lots on Thursday.

Before
after-hours trading was launched, Chinese investors were often exposed
to global price fluctuations in the U.S. and European markets.

Shanghai Gold Exchange
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“The extended hours could give China a better hold in the global gold market” noted Reuters.

That it will and we are gradually, and imperceptibly to most, seeing
China becoming one of the key players in the global gold market - from a
monetary perspective, from a supply and demand perspective and soon
from a price perspective.

China, its people, its banks, its central bank and its Gold Exchange
will soon exert more influence on the gold market than the speculators
who have greatly contributed to gold’s recent price weakness.

The Chinese understand the importance of gold as a store of wealth
and as financial insurance unlike many western speculators and banks and
the mass of the western public … today.

Has Gold's 'Bubble' Burst Or Is This A Golden Opportunity?
Our recent well-attended webinar has been uploaded to YouTube [16].

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