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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: IngotWeTrust who wrote (98874)	10/7/2008 2:21:09 PM
From: Valuepro	Respond to of 116762

18 percent? I'll accept that as I think it was 15 percent in the beginning, but may have been raised later.

To: IngotWeTrust who wrote (98874)	10/8/2008 10:32:28 AM
From: Alex	Respond to of 116762

Chinese gold hoarding set to increase with liberalised gold trading London-based analyst Gary Mead for Virtual Metals Group sees China as a big global driver for expanded gold demand through liberalisation of its trading regulations, seeing the colossal financial and metal price collapses as being “gold friendly.” Author: Ross Louthean Posted: Monday , 06 Oct 2008 PERTH - The latest Asian Metals Monthly report, compiled for Fortis Bank by the VM Group,sees gold, both physical and futures, as having a strong long-term outlook in China. Analyst Gary Mead said gold remains a place for storing your money when all else if failing, and it is most evident in China where liberalisation of gold trading is opening up opportunities for investors of all shapes and sizes, both overseas and within China itself. Despite recent wider market turmoil, the high annual savings rate among Chinese households with even the country's poorest traditionally saving about 30% of their income. Mead said that until quite recently China's gold market has been strictly regulated, and closed to foreign participation. "It was not always thus. Back in the 1930s, the Shanghai Gold Business Exchange (as it was called) was one of the biggest gold trading centres in the Far East, and gold was a very popular investment. Turmoil of war and civil strife put an end to that, and the establishment of communism in China saw the State extend control over all aspects of the country's economy. "In 1950, the People's Bank of China (PBOC) was granted a monopoly on bullion trading, and private citizens were legally barred from conducting gold or silver transactions. In 1982, as the Chinese economy began to liberalise, China opened a retail market for gold jewellery." In 1993, the State switched from a fixed gold price to a State-determined floating one. Then, in 2000, China's new five-year plan included the proposal to establish a gold market. The pace of change since then has picked up rapidly. In April 2001 the Governor of the PBOC announced abolition of the bank's monopoly. June that year saw introduction of the weekly quotation system for the gold price; this adjusted the domestic gold price in accordance with fluctuation in international gold prices. The big breakthrough came in late 2002, when the Shanghai Gold Exchange (SGE) started full trading of physical gold. Simultaneously, the PBOC.s controls ended. The move towards liberalisation of the gold market was partly linked to China's application to become a member of the World Trade Organisation. "Trading gold futures has taken a little longer to get going, but the signals of official approval were clear by 2004. At the London Bullion Market Association's Conference that year, auspiciously held in Shanghai, the Governor of the PBOC, Zhou Xiaochuan said China's gold market should gradually realise three transformations -- from commodity trade to financial trade, from spot transactions to futures transactions, and from a domestic market to integration with the international market. "The now 60-year old Zhou is still head of PBOC and, as an experienced and clever technocrat, has good claim to be considered a future premier of China," Mead said. "He is certainly a supporter of greater market freedom and once said If the market can solve the problem, let the market do it. I am just a referee. In Shanghai he specifically called for China's gold market to evolve from simply spot transactions to gold derivatives. Zhou recognised that, while gold trading by individuals was prohibited, Hong Kong traders and individuals were in any case trading gold through underground channels. Better to have it out in the open than have it go on but in a "criminalised manner." The State Council promulgated in March 2007 new legislation which opened the door for Chinese commercial banks to engage in specific types of commodities futures transactions. Prior to that, commercial banks could legally only engage in officially-prescribed financial futures transactions, largely relating to currency and interest rates. Simultaneously, the China Banking Regulatory Commission (CBRC) issued permits allowing Chinese commercial banks to trade gold futures on the Shanghai Futures Exchange (SHFE). Commercial banks are required to be members of the Shanghai Gold Exchange (SGE) -- China's only spot gold trading platform -- and the SHFE, before conducting gold futures trading The next important step came in September 2007 when the Securities Regulatory Commission approved gold futures trading on the SHFE. Through the SHFE banks must have a capital adequacy ratio of at least 8%. The CBRC prohibited commercial banks from acting as agents for gold futures, in an attempt to minimise insider trading by banks. Chinese commercial banks are spot gold trade dealers, and some are granted gold import and export licences, enabling them to participate in the global spot gold trade. Mead said the CBRC believes participating in gold futures trade could enhance commercial banks competitiveness, and give an efficient risk management system over a derivative market. The SHFE finally launched gold futures trading in January this year with a contract size of 1,000 grams (32.15 oz), three times that of the originally planned contract size.