A Letter To Andrew Maguire

Dear Mr Maguire,
Yesterday I read an interview with you that was published on King World News. In it you mentioned gold delivery numbers from the Shanghai Gold Exchange. I might have a different perspective on these numbers and I would like to bring this to your attention as I'm most concerned about accurate data being spread through the gold community.
 A quote from the interview:   

…We also know that official Shanghai gold deliveries have accelerated since that time.

Last week I reported the September numbers to you and it was over 225 tons of gold being delivered. But as of today, for the 9 delivery days of October, we already have over 101 tons of gold delivered.  

The Shanghai Gold Exchange (SGE) has a Chinese website and an English website. Although they look alike, they are not the same. Only the website written in Chinese publishes data on the amount of gold that leaves the SGE vaults. On this site every friday a PDF report is released on the prior trading week; including the course of trading volumes, turnover, open and closing prices, premiums and the amount of gold withdrawn from the vaults. Usually half way each month there is also a monthly overview published containing the same data categories. Below is a screen dump of the trading activities section of last friday's weekly report from the Chinese website:


This is the section that contains data on withdrawals:

The second number from the left (本周交割量) is the gold withdrawn in the week covered by the report, the second number from the right (累计交割量) is total gold withdrawn YTD. Also note, all gold contracts on the SGE can be physically delivered and these deliveries can be withdrawn from the vaults. The difference is that some, like Au99.99, are spot contracts while others, like Au(T+D), have the option for future delivery. 

On the English website a different data set is published on a daily basis, it looks like this: 


At the far right we can see "delivery volume" for the contracts Au(T+D) and Ag(T+D), but this does not describe the amount of gold leaving the SGE vaults, it describes the amount of gold in the SGE vaults that changes ownership after settlement between Au(T+D) contracts at the end of a trading day. A process that can be repeated to infinity; this doesn't tell us how much gold flows into China mainland.
You stated in the interview that in total 225 tons of gold were delivered in September and 101 tons from 1 till 18 October. With which I assume you mean gold being withdrawn from the vaults – in my opinion the amount of gold changing ownership in the SGE vaults is of no importance to readers of KWN.


If I sum up all the daily "delivery volumes" from the English website the outcome is 225 tons for September and 101 tons for the period in October. This makes me conclude your delivery data is based upon the gold volumes changing ownership in the SGE vaults, while the SGE also publishes the numbers on gold leaving the vaults (that gives us gold investors very detailed information on Chinese demand). That's why most commentators (including me) use the withdraw numbers from SGE when they speak of SGE delivery.


For September 2013 the amount of gold that changed ownership in the SGE vaults was 30 % higher than the amount of gold that left the vaults.

My only purpose with this letter is to make sure you, and readers of KWN, are aware of the different types of data the SGE publishes. I hope this information is of any value for you.

Kind regards,

Koos Jansen


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