Comex Gold Deliveries vs. the Shanghai Gold Exchange

Comex Gold Deliveries vs. the Shanghai Gold Exchange

Comex vs. the Shanghai Gold Exchange

Extreme mismatch in volumes of physical gold delivered highlights the paper contract nature of the United States Comex vs. the physical delivery nature of the Chinese Shanghai Gold Exchange

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How Much Gold Is Actually Delivered on Comex?

Earlier this month in “Chinese vs. United States Gold Demand – Perspective” we made a series of comparisions of the volume of physical gold deliveries on the Shanghai Gold Exchange with the volume of American Gold Eagle coins sold. One comparison showed that in just the first three weeks of January, the volume of gold in tons delivered on the Shanghai Gold Exhange was more than twelve times the amount in tons of American Gold Eagles sold during 2014.

chart showing the volume of American gold eagles sold in 2014 vs sales on the Shanghai gold exchange  in January 2015

The total weight of all American Gold Eagles sold in 2014 was more than 12X less than the amount of gold delivered on the Shanghai Gold Exchange in the first three weeks of January 2015.

The West Sells Paper Gold Contracts, While the East Buys Physical Gold

This was perhaps an unfair comparision as the American Gold Eagle market is a mixed collector/investor one. The U.S. Comex is strictly an investment market as is the Chinese Shanghai Gold Exchange. The major difference between the two is the former is largely a paper market and the latter, a physical one. While Comex traders buy and sell long and short gold contracts, Shanghai Gold Exchange traders buy and sell physical gold bullion.

Many commentators have been prediciting a collapse of the Comex. These annual predictions fail to take into account that the Comex traders (largely made up of bullion banks) are not interested in taking physical delivery of gold. Comex is a place where traders sell gold they don’t have to people who don’t want to take delivery. A Comex default, therefore, is highly unlikely because the traders there know its all about exposure to the price of gold, not the taking of delivery of it. The Shanghai Gold Exchange in contrast, is all about taking delivery of physical gold.

Here is a chart that highlights how little gold is actually delivered on Comex, especially when compared to the amount of gold delivered on the Shanghai Gold Exchange.

Chart showing comex vs shanghai gold exchange deliveries in 2014

The Shanghai Gold Exchange delivered far in excess of twenty times more gold than Comex in 2014.

Here is a chart from Nick Laird of Sharelynx showing Comex deliveries and stockpiles of gold from 2006-2014:

Comex Gold Deliveries and Stock Piles 2006-2016

chart showing comex deliveries 2006-2014

Comex gold deliveries in 2014 were 2.7 million ounces (84.375 tons).

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Further Reading:

Silver and gold short position on Comex

Silver and gold long and short positions on Comex

Chinese physical gold demand vs U.S. gold demand

U.S. silver demand for coin production

China and Gold

The Importance of Gold

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