Shanghai Gold Exchange Au(T+D) Delivery Volume Trends
Lastest Weekly Report: 6 December 2013, published on 13 December 2013
Weekly Gold Delivered: 44.3 tonnes for week ending 6 December 2013.
Cummulative Deliveries for 2013: 2023.2 tonnes
An example of the Chinese langauge report showing delivery volume from vault is presented below. The image below was taken from p. 7 of the 14 June 2013 report (available 21 June 2013) which can be found in the weekly Chinese language reports page, the location where weekly Chinese language reports can be accessed.
Charts prepared using the weekly gold deliveries from SGE vaults and other related information are available here. An excellent blog on Shanghai Gold Exchange physical delivery is also available here.
Data on daily delivery from vault is not available in any SGE report -- the quantitly labeled as delivery volume on the SGE English language pages should be understood as "settlement volume" and is definitely NOT delivery volume from vault.
I received the following explanation on the daily Au(T+D) delivery, which I track in the next section below, from a contact at the SGE:
Simply speaking, Au(T+D) is a product with margin and position concept, i.e. you get a long position after buying and get a short positon after selling. Delivery happens everyday between long and short positions. So delivery volume is the volume delivered from some short positions to some long positions. It's nothing relevant to the volume leaving the vault which is not an available data. Think about futures, delivery occurs from short positions to long posotions, kind of similar concept for your understanding.
My SGE contact would not, however, comment on the approximately 20 days of 0 Au(T+D) delivery volume during April and May of this year.
Sorry as an exchange, we can not make comments on trading pattern. You have to analysis by yourself based on public info.
The SGE has a flexible range of good delivery bars, which I believe is consistent with an exchange that is commonly used for physical delivery to consumers (source: CHINA NATIONAL GOLD GROUP CORPORATION):
For consistency with the SGE, which reports in units of kilograms, I now show all daily totals in tonnes.
Shanghai Gold Exchange (SGE)" Price - Daily, Au(T+D):
13 December 2013 Close:
Au(T+D) Volume: 37.9 tonne of gold, a change of 96.4% from previous close.
Au(T+D) Open Interest: change of 0.4% from previous close.
Au(T+D) Delivery Volume (aka Settlement Volume): 19.9 tonne of gold.
Au(T+D) Close: $1261, a change of 0.0% from previous close.
Peak One Day Au(T+D) Volume: 104.5 tonne of gold, 16 April 2013.
Peak One Day Au(T+D) Delivery (Settlement) Volume: 32.3 tonne of gold, 22 March 2013.
Current Month Au(T+D) Delivery (Settlement) Volume (sum of daily figures): 94.8 tonne of gold as of 13 December 2013.
Peak One Month Au(T+D) Delivery (Settlement) Volume (sum of daily figures): 297 tonne of gold, March 2013.
Shanghai Gold Exchange Au(T+D) Delivery (Settlement) Volume, past years:
2012: 2,158.7 tonne.
2011: 1721.7 tonne.
Au(T+D) daily settlement volumes have returned to normal levels in June after the unexpected drop to virtually zero since April 22 through to the end of May. This type of drop-off in settlement volume last occurred in January 2011. The physical significance/interpretation of the April/May 2013 and January 2011 drop off of Au(T+D) Delivery (Settlement) Volume is unknown but IMO is worth further investigations. Clearly the exchanges believes the Delivery (Settlement) Volume is as important as closing gold price, delivery volume and open interest since delivery (settlement) volume is reported at the same report level.
The above graph of physical gold delivery out of the Shanghai Gold Exchange (SGE) vaults was prepared by @KoosJansen (website In Gold We Trust) based on the weekly reports from the Chinese portion of the SGE site. The SGE has confirmed these are deliveries from the vault and the numbers are updated on a weekly basis (each Friday). I expect to have the weekly delivery data available here. The recently available China Gold Market Report 2011 provides an excellent overview of the Shanghai Gold Exchange and physical gold deliveries. The monthly gold deliveries shown in "Figure 3-8 Delivery volumes and weighted average prices of Au (T+D) at SGE in each month of 2011" on p. 17 of 32 in the report shows the same 2011 monthly delivery figures in the chart below.
I believe there is an open question in understanding the SGE gold delivery from vault numbers. Consider the following quote from the SGE 2011 Annual Report:
During the year, SGE's vault management system run in good shape, with 49 vaults used for delivery involving 31 jurisdictions. Among the vaults used, 72.06 percent were designated, fulfilling the demand for physical gold in the entity industry.
I imagine that there would be some sale events where Dealer A in Jurisdiction 1 sells gold to Dealer B in Jurisdiction 2 and in turn later in the week/month/year, Dealer B sells the same gold to Dealer C in Jurisdiction 3. The SGE vaults and jurisdictions in operation in 2011 certainly suggest such a scenario is likely to happen. Given that dealers also sell to local clients, I would expect that each deal would want their physical held in their vaults in their jurisdiction for efficient access as required.
Therefore it would be extremely useful to understand the "velocity of gold" in the SGE system. That is, on average, how many times is each kilogram of gold delivered in the course of a week/month/year. My wild guess, based on no science and no first hand knowledge is that SGE velocity of gold is 2 or greater. I look forward to future discussions on this important topic via Twitter, @goldminerpulse. @KoosJansen suggests that my dealer to dealer sale scenario would be treated as a paper transaction and counted as an Au(T+D) deliver but not a physical deliver from the SGE vaults.
@KoosJansen could be correct that this scenario would not result in double counting which still leaves the question as to what are the other scenarios in which a given 1Kg bar of gold gets delivered multiple times from the SGE vaults in the course of a week/month/year. For example, private investor Z buys 1Kg from dealer A and subsequently Z needs to raise cash (say his private wealth investment failed and s/he needs money now) and sells the 1Kg bar back to dealer A. Dealer A subsequently sells the same bar to private investor Y. Under any counting rules this scenario would result in double counting. However, would such a theoritical scenario occur with any appreciable frequency?
The above graph of monthly gold delivery from vault demonstrates very clearly, what many have expressed repeatedly on sites such as KingWorldNews, that the COMEX is a paper gold market while the SGE is a world class market for physical gold delivery.
Note: The 2013 figures are year to chart date.
Based on my TSX Gold Producer 4Q on 4Q growth rate, I expect 2013 production growth will be less than 1%. Also factoring in the loss of Rio Tinto's Kennecott gold production since April due to a collapse of an open pit wall, plus the fact El Coronel mine in Zacatecas Mexico is having labor problems, along with the April plunge in gold prices, I expect to see a negative growth rate in the world's 2013 gold production over 2012 totals.