Rocky Vega

China’s on a mission to further internationalize its gold market, as indicated by a recent announcement to allow more foreign bullion suppliers to import, export, and trade in its market. Previously, the Shanghai Gold Exchange had only five external bank members and that’s including the Chinese divisions of HSBC and Standard Chartered. This looks likely to change soon.

According to Bloomberg:

“Gold demand in China, the world’s largest producer, gained in the first half as government measures to cool the property market and falling equities spurred investment, the Shanghai Gold Exchange said July 7. Spot gold gained to a record in June as investors sought to protect their wealth amid concerns about the global economic recovery.

“‘China’s domestic production of gold, albeit the largest in the world, cannot satisfy its demand,’ said Ellison Chu, managing director at the precious-metals desk at Standard Bank Asia Ltd. in Hong Kong. ‘By allowing more foreign participation and more Chinese commercial banks to import and export, China can better balance its demand and supply.’…

“…’China’s gold market liberalization sends a strong demand signal and its very positive for the price of gold,’ said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. ‘It is a structural demand shift which must result in higher gold prices as the global equation has changed now significantly with more gold consumers and investors.'”

China has consistently downplayed the concept of using gold as a foreign reserves asset – this, despite being the world’s largest producer – but, is again bolstering enthusiasm for gold as it’s done before. In the past, China has specifically encouraged its citizens to maintain personal savings in the precious metal. Now, in addition to bringing more players into its gold market, it’s planning to provide new financial support for overseas investment by large bullion companies. China insists gold is not that useful, but it almost denies its interest so much – while it concurrently strengthens its own market — as to appear insincere.

You can read more details in Bloomberg coverage of China opening its gold market to further trading and imports.

Best,

Rocky Vega,
The Daily Reckoning

Rocky Vega

Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.

Recent Articles

The Wreck of the Monetary Hesperus

David Stockman

For 73 months running, the Fed has lashed the money markets to the gross financial anomaly of zero interest rates. Never before in the history of the world has any central bank dared to hand out so much free money for so long. David Stockman has the scathing report… and how it will splatter into a world of hurt…


“Two Percent Inflation” and the Fed’s Current Mandate

Ron Paul

Dr. Ron Paul, via his Ron Paul Institute for Peace and Prosperity, has written a full-blown indictment of the Fed and their 2% inflation target. It’s below, complete with 14 lessons we’d be wise to heed. It’s lengthier than our normal feature, but well worth your time...


The Opportunity Most Investors Missed Last Year, But Not You!

Frank Holmes

2014 was a hard year for commodities, but there were some surprising opportunities, for in-the-know resource investors like you. Today, our friend Frank Holmes discusses some of the winners and losers and why we saw the market take the shape that it did. But more urgently for you, he also points out an unlikely winner…


Take a “Hack” At Cybersecurity Stocks for 20% Gains

Greg Guenthner

Sony's recent hacking incident with The Interview is only part of the reason I believe the cybersecurity industry is on the verge of a breakout year. Target and Home Depot also suffered embarrassing incidents recently. The demand is enormous--companies just can't ignore the dangers of data breaches any more.