Individual Chinese investors will be allowed to trade in gold as early as next year as the nascent Shanghai Gold Exchange tries to stimulate trading, an exchange official said yesterday.
The exchange is considering allowing individuals to buy or sell gold bullions next year, as China moves closer to fully deregulating the precious metal.
However, the plan has to be approved by the People's Bank of China.
Although the official opening of China's first gold exchange last month ended a 50-year monopoly of the central bank over gold distribu-tion, the bank still acts as a regulatory body over market transaction.
The bank was blamed for delaying the opening of the exchange for almost 10 months before finally deciding not to levy the 17-percent value-added tax on the bullion.
"Given the bank's prudent stance in the gold liberation, we cannot set a timetable and disclose details of allowance to individual investors," said an exchange official, who requested anonymity.
Industry officials said transaction regulations have to be modified if the gold exchange opens to individual investors.
Given the exchange's current price of 85.58 yuan a gram (US$320.67 a troy ounce) and the least trading volume requirement of 1,000 grams, a retail investor will have to arrange at least 80,000 yuan for ordering a "buy" in the spot exchange.
"The current rules, if maintained, will keep a lid on people's trading interest," said Zhou Min, vice general manager of Shanghai Laomiao Jewelry Co. Ltd., a leading jewelry processor and retailer in the city.
Zhou's firm is among 91 members authorized to trade and act as broker at the exchange.
For decades prior to October 30, the central bank bought gold from miners and sold them to processors.
Gold consumption on China's mainland rose by 3 percent to 213.2 tons in 2001, according to the producer-funded World Gold Council. Calculated on a daily basis, taking into account 210 working days, the figure is almost triple the transaction volume at the exchange, which stood at about 400 kilograms each day.
"The thin trading volume should not come as a surprise because market regulation has only just begun and gold firms, especially miners, haven't got used to market-oriented business," said the exchange official.
(eastday.com November 28, 2002)