Chinese gold bugs will be allowed to trade in the precious metal under reforms that are designed to upgrade trading on the country’s burgeoning gold market.
The move will provide another choice for individual investors who keep their money stashed in bank accounts due to a lack of desirable investment options. An estimated 1.2 trillion yuan (US$145 billion) sits idle in Chinese savings accounts.
“China will speed up the opening of its gold market to bring gold exchanges more in line with international practice,” Central Bank Governor Zhou Xiaochuan told an industry conference in Shanghai in early September. “China’s gold market will eventually become one inseparable part of the international gold market.”
China maintains stringent controls on trading in the precious metal, and restrictions on gold imports and exports limit international dealings.
The Shanghai Gold Exchange, the country’s only gold market, opened in October 2002, though most transactions are still in the spot market.
The 108 members of the exchange include only gold producers, gold-consuming companies and commercial banks.
In late June, the Shanghai market began allowing trading in 50-gram (1.76-oz.) bars, lowering the threshold for investors.
Transactions on the Shanghai Gold Exchange totalled 235.35 tonnes valued at 22.96 billion yuan (US$2.7 billion) last year. In the first seven months of this year, trading volume jumped to 363.76 tonnes valued at 36.9 billion yuan (US$4.5 billion), according to state news agency figures.
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