Cut set to draw gold investors
Zhang Fengming
2006-12-08
MORE investors are likely to make a beeline into the gold trading market when the threshold to trade individual real gold bullion on the Shanghai Gold Exchange is drastically cut by 90 percent next Monday, one of China's biggest banks said yesterday.
The Shanghai branch of Industrial and Commercial Bank of China will lower the threshold for gold bullion trading from 1,000 grams to 100 grams in the country's sole gold exchange from December 11 to attract more investors into the market.
The local branch of ICBC, the country's biggest bank, is the sole player offering a platform for individuals to trade gold on the bourse and allow them to take the bullions home after paying a fee of 0.2 percent.
More banks have showed interest to start such service, said a Shanghai Gold Exchange official.
The minimum investment will drop from more than 160,000 yuan (US$20,427) to 16,000 yuan based on current prices on the gold bourse.
"The cut in the threshold will help to attract more small-cap investors to the market," said the bank.
The move will help cut costs for investors who are now able to hold the bullions in their hands. Investment-grade bullions were sold at around 185 yuan a gram in the market by jewelers and wholesalers of gold bars and coins, or a premium of about 10 yuan on prices in the bourse.
So far, around 2,500 investors have started to trade 7,600 tons of gold with ICBC since the lender started the business on July 18.
Other lenders including Bank of China and China Construction Bank have already offered paper gold trading where investors can't hold the bullions but instead bet on gold prices through a special bank account.
Chinese have a traditional frenzy for keeping gold bullions on hand as a safe heaven to hedge against inflation and as a fortune symbol. The country is the world's third-biggest gold consumer.
Gold sales in China gained in the third quarter, mainly boosted by surging demand for gold bullion investment, the China affiliate of the World Gold Council said earlier.
The demand for investment gold, or products sold by banks, more than doubled to 2.5 tons in the third quarter, up 119 percent from a year ago. |
