Shanghai gold premium gives $2200/ounce target

The Shanghai gold premium gives a target of $2200/ounce by March 2024. 

Shanghai Composite Index Vs. Copper

The Shanghai Composite Index is correlated to copper price. This is because China heavily depends on commodities. We see a pennant formation shaping up and expect a breakout in 2021.

 

Shanghai SGE gold demand spikes

 Shanghai gold deliveries hit a yearly record high in September. 

Silver is about to explode

Just 3 words: OMG.

China Shanghai premiums are up

China's interest in gold isn't waning, Shanghai gold premiums are going up.

SHFE Shanghai Futures Exchange Silver Vs. Silver Price

The Shanghai Futures Exchange Silver contracts started in May 2012 and provide a very important indicator for the silver price.

In fact I even believe that silver inventory at the SHFE warehouses is a leading indicator for the silver price.

You can find the data here: http://www.shfe.com.cn/en/MarketData/dataview.html?paramid=week
 

I have plotted the silver price in U.S. dollars (orange) Vs. silver stocks at the SHFE warehouses (blue). As you can see the SHFE silver stock bottomed in 2014 and started to rise to a high in 2016. Silver prices followed this move upwards with a delay of a year.

Then, silver stocks at the SHFE dropped in July 2017 and silver prices dropped with a delay in July 2018.

It will be interesting to watch how the SHFE silver warehouse stocks are evolving now as there is talk about a whale buying up silver. This whale is thought to be China so we should see this happening in the SHFE silver warehouses soon.

Gold demand in China very strong

I found a new site where you can view the Shanghai gold premiums and it's shooting up. This means the gold market is very tight in China.

China's Growth Explodes in February 2017

China's February 2017 power consumption exploded. I have never seen such a large spike.
This means that there is a high probability that China's GDP growth will accelerate and this will bode well for commodities. We'll keep monitoring this trend.

 

This trend is confirmed by the record high Shanghai gold withdrawals in February 2017. 

Something happened in February...

Shanghai Gold and Silver Premiums Through The Roof

This is unprecedented. I have never seen such high premiums before in Shanghai. 3.5% premium (that's $35/ounce) on gold and 12% premium (that's $2/ounce) on silver (VAT tax not included). Just based on this, precious metals could be bottoming out.





Also dealers like APMEX have high premiums for gold.



Silver is somewhat lower in premium.





But what is most striking is that mining companies refuse to lower their physical bullion sale price. This leads to very high premiums.