Shanghai Settles 96% of Gold Trades in Physical Metal

Absorbs 90% of global gold mine production

by Michael J. Kosares
USA Gold

In the World Gold Council’s Gold Investor magazine, Jiao Jinpu, Chairman of the Shanghai Gold Exchange, reports that “In its first month, the Shanghai Gold Benchmark Price’s trading volume was 105.91 metric tons of gold kilo bars, corresponding to a turnover of [renminbi] 27.94 billion and an average daily trading volume of 4.81 metric tons. 102.10 metric tons of gold were physically settled, addressing the market’s need for physical gold.”

In The China Syndrome article series, I emphasize the physical nature of settlements on the Shanghai Gold Exchange as a requirement that will have significant impact on the gold market in the years to come. This quote from Jiao Jinpu verifies the strict application of physical settlement. Over 96% of the volume on the SGE is settled in physical metal. Speculation on the price sans delivery, which drives activity on New York’s COMEX, is discouraged on the SGE.

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