Shanghai Gold Exchange (SGE) on Monday lowered its trading
threshold from one kilogram to 100 grams, opening the market up to
small private investors.
Industry experts believe the move will help diversify gold
investment channels in China and to standardize the market for gold
transactions.
The SGE proposed in July last year the spot trading of gold by
private investors in cooperation with the Industrial and Commercial
Bank of China (ICBC). However, the one-kg threshold, with a market
value of 160,000 yuan (20,000 US dollars), has turned off many
private investors.
The volume of spot transactions by private investors in the
first ten months, for instance, accounted for just 0.57 percent of
the total trade.
Provisional Measures Regarding Administration of Spot Trading of
Gold by Private Investors published by SGE stipulate a private
investor can participate in spot trading and even claim gold
through all SGE financial members or other agents with approval
from the People's Bank of China.
Cheng Fumin, president of the China Gold Association, said sales
of gold had risen since the beginning of the year as a result of
rising prices and the growing acceptance of gold as an
investment.
Sales of gold bullion and gold bars account for one tenth of the
gold consumption gross in the country.
"I think more investors will be attracted to spot trading and
there will be more transactions as the SGE opens its doors wider,"
said Cheng.
China's gold market is restricted to spot trading for the time
being, but the SGE has been developing derivatives such as futures,
options and investment funds.
(Xinhua News Agency December 25, 2006)