Shanghai Gold Premium Hits Multi-Year High

Written by Mike Hammer

How appropos. Just yesterday we wrote about the Shanghai exchange, and how we should keep an eye on the difference between prices there vs the world gold price. This difference is called the premium, as in: How much of a premium do I have to pay to buy known-actual gold (instead of paper gold or derivatives)? Then later that same day the premium hit a new high. At one point purchasers on the Shanghai exchange paid about $28 more than the world gold price. Now this may seem almost trivial here in the US, where many shops charge $75 or $100 more for a one ounce coin than the world price, and as much as $200/oz more for small-denomination coins such as quarter- or tenth-ounce.

The important thing to us is this gives us a benchmark to measure the market. Now that the premium bounced off 28, we know that if we see a premium higher than 28 the market is stressed.

You can read about yesterday’s action in this article.

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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  • I find it interesting to say the least to watch so many interpretations of Hold Going Up and down regularly- Who has the Best Batting Avrage for longevity guys. ??? thank U –

    • Hard to say Dennis, as most don’t publish trading results. Here at The Gold Enthusiast we publish our trading parameters so you can keep track for yourself. Thanks, The Gold Enthusiast