Shanghai Silver Premiums Hit Three-Year Highs

Silver bullion withdrawals from the Shanghai exchange reach muti-year highs.

Bullion.Directory precious metals analysis 29 October, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

The Shanghai-to-London premium for silver bullion is the most expensive in three-years as inventories are drained.

Chinese warehouses are being drained of silver by exporters in order to be qualified for a tax rebate. According to data from the Shanghai Gold Exchange (SGE), the price of an ounce of silver is 17 percent higher than an ounce priced on the London exchange.

Warehouses have seen an 80 percent drop in inventories from the peak seen in February, or roughly 115 metric tons.

The demand is largely seen as an attempt to profit from the tax rebates offered by the Chinese government to promote production of domestic high-end electrical components, although, the Chinese government is aiming to reduce tax rebates and close loopholes to prevent the increase of smuggling of silver into the country.

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