proof of the pudding is in the eating...and the pudding is good:-)) On an annualized basis, a whole lot of gold is going to disappear. Physical gold only is traded. Gold hedgers will be covering soon me thinks. Is there enough gold to repay gold loans?
Press Release Source: World Gold Council
World Gold Council Welcomes Gold Trading in Shanghai
Friday November 1, 3:53 pm ET
NEW YORK--(BUSINESS WIRE)--Nov. 1, 2002--The World Gold Council has welcomed the successful launch this week of trading in physical gold on the new Shanghai Gold Exchange. Trading started on Wednesday, October 30, and in the three days since more than 790 kilos of gold bullion has changed hands.
China formally launched trading in physical gold on the Shanghai Gold Exchange following nearly a year of simulated trading. It marks the end of more than 50 years of absolute control by the central bank over gold trading in China. It is seen as a very significant move in the liberalization of precious metals trading in China and in the reform of its financial markets. The World Gold Council acts as the sole foreign adviser to the Shanghai Gold Exchange.
It is only the second exchange in the world to settle only in physical gold, the other being Turkey which started in 1995.
Jim Burton, Chief Executive Officer of the WGC, said that it was the most important move in recent years in the liberalization of the international gold market.
"This is a very significant development as it brings one of the world's largest gold producers and, one of its largest consuming countries into the free-market environment. We believe that market liberalization will in due course have a large impact on gold demand in mainland China which is currently approximately 200 tonnes a year."
Albert Cheng, Regional Director, East Asia for the WGC, reports that the WGC has been active over many years in fostering a free market in gold trading in conjunction with the Chinese authorities. The opening of the Shanghai Gold Exchange is a very important and satisfactory development which will bring considerable benefits to Chinese producers and consumers. Significantly, Governor Dai Xianglong of the People's Bank of China said in his opening speech that the setting up of the Shanghai Gold Exchange completes the establishment of all major financial product markets in China including currency, securities, foreign exchange, insurance and gold.
"It will also provide a focus for Far Eastern markets trading in gold and give investors greater opportunities to take advantage of gold's safe haven qualities in difficult times, we anticipate commercial banks in China to offer retail gold investment products soon. Most promisingly, the first day's trading totaled 540 kilos, an impressive figure." said Mr. Cheng.
The opening of the Shanghai Gold Exchange also means that the People's Bank of China has given up its role as the only determinant of the domestic gold price. Hitherto, all domestic output was sold to the central bank at a fixed price. The exchange has now taken over that role and, consequently, it is expected that the price in China will now stay more closely aligned to the international price.
According to the Gold Bureau of China, China produced 181.5 tonnes of gold in 2001 and the country's mines will now sell their output on the exchange and not directly to the People's Bank as required by law previously.
Transactions on the new exchange can only be effected among exchange members and market-making will be done by the commercial bank members, although the settlement banks, the Industrial and Commercial Bank of China (ICBC), the Construction Bank of China, the Bank of China and the Agriculture Bank will initially not be allowed to hedge their exposure on overseas markets.
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Contact:
World Gold Council, London
David Pointet, + 020 7766 2718
or
Marston Webb International, New York
Victor Webb, 212/684-6601 |
