CaratChina's counter held its 39.6% margin through a 1.4% move
Shanghai gold reads 954.01 yuan a gram today and Chow Tai Fook's counter 1,332. Three days ago this paper printed 940.72 and 1,312. Both legs rose about 1.5% and the markup moved fifteen hundredths of a point.
§1Two prices for the same gram.
The Shanghai Gold Exchange's Au99.99 contract opened at 946.00 yuan a gram today and last traded at 954.01, a rise of 1.41% on the session, on the market report carried by the Chinese finance aggregator cngold. Chow Tai Fook's 24-carat counter reads 1,332 yuan a gram, a figure carried identically today by two independent Chinese price aggregators, jinjia.com.cn and cngold, which is the strongest agreement available on a counter price. Dividing one by the other, this desk's arithmetic, puts the shop window 39.62% above the exchange, a gap of 377.99 yuan on every gram sold.
Three days ago this paper printed the same pair at 940.72 and 1,312, a markup of 39.47% and a gap of 371.28 yuan. Since then the exchange has risen 13.29 yuan, or 1.41%, and the counter has risen 20 yuan, or 1.52%. The markup went from 39.47% to 39.62%. The margin held to within fifteen hundredths of a point. That is the test this desk set for itself on 14 August, when it argued that the Chinese counter price is a merchant setting a margin rather than a market clearing, and the three sessions since have returned the answer the argument predicted: the shop moved the same percentage the metal did, not the same number of yuan.
§2The margin, not the price.
Two divergences between outside sources belong on the page. On the exchange leg, the Bureau's gold desk read today's Shanghai sessions at 951.80 and 952.98 yuan against the 954.01 used here, and on 952.98 the markup would read 39.77% and the gap 379.02 yuan; this desk cannot establish which minute of the board each page is reading and does not resolve it, so the figures on both bases are printed. On the counter leg, the aggregator series runs 1,312 on 14 August, 1,325 on 15 August, no reading published for 16 August and 1,332 today, so the 20-yuan rise is three calendar days containing two counter revisions rather than a single jump. The counter still moves in whole yuan and the exchange in hundredths, which is the shape this paper has recorded all month.
The margin held to within fifteen hundredths of a point
§3One cross-check and one limit.
One cross-check and one limit. Gold at $4,394.60 an ounce, this paper's own mark of record this morning, is $141.29 a gram, and 954.01 yuan against $141.29 implies 6.752 yuan to the dollar, which is this desk's arithmetic and is not an official rate; it is printed as a sanity test on the Shanghai figure rather than as a currency quotation, and it lands where a plausible rate would. The limit is the one this desk prints every time: a listed counter price is an asking price, not a transacted one, and workmanship charges, store discounts and buy-back terms sit outside both numbers. What a Chinese buyer actually pays is above 1,332 and what she can sell back at is well below 954.01.
The counter is priced as a percentage, not as a price, and three sessions of live data now say so rather than one desk's inference. That is a more useful fact than either number on its own. It means a Chinese retail gold price can be forecast from the exchange with a multiplier, that a fall in Shanghai will show up in the shop window within a day or two at roughly forty per cent on top, and that the widening this paper reported between 9 and 14 August, from 37.10% to 39.47%, was a repricing of the margin itself rather than a lag in the shop catching up. The number to watch is still the 39.6%, not the 1,332. A margin that survives a 1.4% move in the underlying is a decision somebody is defending.
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