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Showing posts with label arbitrage. Show all posts
Showing posts with label arbitrage. Show all posts

Thursday, December 1, 2016

The difference between London paper price and Shanghai physical price now expanded to $32

As the dollar continues to stay above 101 on the index, the spot price of gold continues to get crushed in the Western paper markets.  In fact, ever since Nov. 9 when Donald Trump was declared to become the next President of the United States, gold has fallen over $200 despite increased demand in places like India, Russia, and Vietnam.

But starting back in April, London was no longer the only entity setting a daily price 'fix' for gold as the Shanghai Gold Exchange officially began its own price fix earlier this year to manage the trading of the precious metal during periods when both Europe and the U.S. were closed.

And for the rest of spring and well into summer, the spread between the two markets stayed relatively the same, with the London fix and the Shanghai fix only diverging by perhaps a dollar or two on any given day.  But over the past three weeks this has now changed as the spread between the Western paper market and the Eastern physical one has climbed to a massive $32 difference in the fix price.




Shanghai PM Gold Fix - Dec. 1, 2016


London AM Gold Fix - Dec. 1, 2016


As you can see from the price, the spread has now reached just under $32 per ounce difference.

If the spread continues to widen even further then it will open up two potentially lethal events for the LBMA and the COMEX.  First, it will cause miners who normally sell their gold production through these commodity exchanges to instead find it much more profitable to ship their metal to China and sell it on the SGE.  And secondly, the potential for a massive arbitrage will come into play where one or more big investors will buy up all the gold futures contracts and demand physical delivery at the lower paper price, which they will then sell their gold over in China and pocket the difference as profit.

For decades now the Western gold futures markets have been a vehicle in which central banks and the U.S. Treasury have manipulated gold prices in a scheme used to protect the dollar, especially during this era of massive money printing and zero percent interest rates.  But now that China has taken over as the world's largest physical gold market, more and more they are coming to set their own price for the metal, and it should not be too long before they officially wrest that authority away from both London and New York.

Saturday, October 22, 2016

Gold price difference out of China now up to $5 more than in London or Comex

On Oct. 18 the spread in gold price between the Shanghai Gold Exchange (SGE) and the London/Comex gold fix was a record $5 as the Eastern physical markets continue to ever so slowly pull away from the Western paper gold markets.

The SGE is the largest physical gold market in the world, and commenced declaration of its own gold price back in April of this year.  And over the course of 2016 they have intermittently increased the spread between themselves and the purely paper markets run out of London and New York.

Shanghai Gold Exchange fix times: 10:15pm est and 2:15am est 
London gold fix times: is at 5:30am est and 10am est 
Shanghai morning fix OCT 18 (10:15 pm est last night):  $1276.80 
NY ACCESS PRICE:   $1271.50 (AT THE EXACT SAME TIME) 
Shanghai afternoon fix:  2: 15am est:  $1274.31 
NY ACCESS PRICE:   $1269.70 (AT THE EXACT SAME TIME) 
Spread between each market at both fix times:  $5 difference - Silver Doctors
As this difference in price continues to expand, it will eventually create an price evaluation where gold miners will stop selling their products to the Comex or LBMA, and find it more affordable and profitable to ship their gold to Chinese markets..  Likewise, it will also eventually lead to an arbitrage where traders will buy all the gold up in both London and New York, and then sell it to Shanghai causing an asset flight from West to East.

Thursday, September 1, 2016

China's gold market may be making move on Comex as prices in Asian market go higher than London spot

The one big fear that both London and the U.S. Comex have in their long-standing control over the world's gold price may soon be coming to pass as prices at the Shanghai Gold Exchange (SGE) are climbing higher than the London fix, opening the markets up to a potential arbitrage that could wipe out the West's supply of the precious metal.

On Sept. 1, the day that China began selling M SDR bonds on the open market, the price of gold at the SGE opened $9 above the London fix price, making it more profitable for both miners and sellers to participate in the Chinese market over both London and New York.

Shanghai morning fix (10:15 pm est last night) 
$1319.72   (price in NY on access at the exact same time:  $1310.94) 
Shanghai afternoon fix:  2: 15 am est (second fix/early this morning) 
$1315.99    (New York price at the same time: $1313.30) 
The two London fixes:
Aug 31 2016 am:$1314.45  (2 am est)
pm:$1309.25 (10 am est) 
Take a look at the Shanghai fix.  Their early morning fix (our late at night time zone) saw the fix at $1319.72.  The exact NY price at the time was 1310.94 for a difference of almost 9 dollars. 
The second fix has:  Shanghai at 1315.99 with NY at 1313.30 an the exact same time/the London fix came in at 1314.45 with timing 15 minutes later 
It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex. - Silver Doctors

Friday, April 15, 2016

When the SGE declares its own gold price next week, the arbitrage battle for gold really begins

April 19 is the expected day the Shanghai Gold Exchange (SGE) is to declare its own Yuan denominated gold price in the world's largest physical gold market, and we are now less than four days away from what could be a radical sea change in the entire precious metals industry.

This is because no one yet knows at what price the SGE is expected to open with next week, but since the market currently marks up gold sales with as much as a 40% premium already, chances are extremely good that it will be much higher than the price long controlled by London and the U.S. Comex.

And should this truly be the case, where China announces a price that is greater than the Spot price determined in Western markets, then part one of China's gambit will be revealed, and it involves an arbitrage scheme meant to entice a shifting of all metals Eastward, using the greed of the West to accomplish this.

An arbitrage is when one market buys or sells an asset at a much different price than another market, allowing customers and investors the chance to skim profits from the difference between the two prices.  And an example of this would be if the SGE offered a buy price of say $1600 in U.S. dollar equivalent, where the current Comex spot price is $1235.  This difference in price would trigger a run on the Comex, where investors would try to buy up all available gold contracts, demand delivery, and then sell it to the SGE and collect the difference in profit.  The result of course is that the West would suddenly be drained of all their gold, and now China would have sole control over the global gold market.

Analyst Dr. Jim Willie also spelled this out in an interview he did earlier this week.

The Chinese attack within the Gold market could hit Satanist bankers where they live, in the fire of mid-April.... The arrival of the Gold futures contract in Shanghai poses an additional risk for the Western banker cabal, a grand crime syndicate which extends to the energy firms, the military industrial complex, the big pharmaceutical firms, and the press networks. 
A real valid bonafide Gold contract which delivers physical gold would enable vast arbitrage to buy cheap in London and sell dear in China. Any acceleration in the arbitrage activity, combined with any sincere attempt to set the Gold Fix in a reasonable manner that puts equilibrium as priority, and the Western bankers will face the USDollar kicked to the curb and possible global boycott. - Rogue Money
It is no coincidence that one time London Gold Fix committee member Deutsche Bank came out yesterday and admitted to the fraud and manipulation that has long taken place in the Western gold markets, and these revelations will provide China a strong boost for their new pricing mechanism if/when it comes out next week.  And besides just investors rushing to leave the Comex and begin participating in the SGE, a more important group of metal players will just as likely do the same, and they are the miners and refiners of gold and silver who will gladly take their production and move East to finally get a price worthy of their output.