Carat938 at the exchange, 1,286 at the counter
Shanghai Gold Exchange Au99.99 traded at 938 yuan a gram on 8 August, up 7.53 on the day. Chow Tai Fook's 24-carat counter read 1,286 yuan, a spread of 348 yuan a gram, about 37% over the benchmark.
§1A 348 yuan gap on the same metal.
The gap between what gold costs in China and what a Chinese jewellery counter charges for it is 348 yuan a gram. The Shanghai Gold Exchange's Au99.99 contract traded at 938 yuan a gram on the morning of 8 August, up 7.53 yuan from the previous close. On the same day Chow Tai Fook listed 24-carat jewellery at 1,286 yuan a gram, Chow Sang Sang at 1,285, Lukfook at 1,284, Lao Feng Xiang and Lao Miao at 1,283 and Zhou Liu Fu at 1,281. Every major brand sits within five yuan of every other and roughly 37% above the exchange benchmark.
The wider measure is larger still. The same Mandarin tally puts the distance from the Shuibei wholesale price, the Shenzhen market where most of China's gold jewellery is actually made and traded, to the highest brand counter price at 170 yuan a gram. What changed this week is the direction of travel rather than the size of the gap. On 6 August the major brands raised counter prices by close to 60 yuan a gram in a single session, Sina Finance reported, against a benchmark that moved a fraction of that. The counter is no longer following the benchmark. It is running ahead of it.
§2The counter stops lagging the benchmark.
This paper declined to print a Chinese brand-counter figure on 7 August. Two independent reads of the same day's price stood at 1,240 and 1,297 yuan a gram, the main aggregator returned empty price cells, a second site failed on its certificate, and the house rule against printing an unverified price left nothing publishable. The 8 August figures settle it: one Mandarin financial-press table carrying six named brands, cross-checked against two independent brand-price trackers, all agreeing inside five yuan. The story pulled on Friday is the story that prints today, with the number it was missing.
The counter is no longer following the benchmark. It is running ahead of it
§3A margin held into a third less volume.
The demand backdrop is what makes the spread interesting rather than merely wide. This paper reported on 7 August that the China Gold Association put first-half gold jewellery consumption at 132.13 tonnes, down 33.88%, against bar and coin demand of 339.34 tonnes, up 28.42%. A counter charging 37% over the exchange price into a market that has bought a third less jewellery by weight is not holding that margin out of confidence. It is holding it because the fixed cost of a branded retail network does not fall when tonnage does, and because the customer who left has gone to a product where the spread is visible, printed and small.
A 348 yuan spread is a making charge with a market of its own, and it has started moving on its own schedule. For most of the past year Chinese brand counters lagged the metal, absorbing rises and holding list prices for days, which is what a retailer does when it is defending footfall. Moving close to 60 yuan in a session, and moving further than the benchmark across two days, is what a retailer does when it has decided the volume is not coming back and the margin per gram is now the business. Any brand pricing into China this autumn should read six counter prices sitting within five yuan of one another as a collectively held floor rather than a competitive market, and should set its own making charge against 1,286 rather than against 938.
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