After the Shanghai Gold Exchange opened in 2002, domestic commercial lenders began offering gold investment products to individual investors. Bank of China was the pioneer, launching paper gold investment in November 2003. That same year, China Merchants Bank became the first Chinese lender to sell gold bullion bars.
Hua Xia Bank is the new kid on the block when it comes to gold trade. The smaller lender only began trading real gold for customers last year. But the gold price surge earlier this year quickly helped them raise their game.
Li Wenfeng, Trader of Huaxia Bank said "Since last September, our gold business has remained robust. It’s because of the sub-prime mortgage crisis, the sluggish domestic equities and the risky currency markets. Gold trading is very active. Even after gold prices dropped from their peak of 1,032 US dollar per ounce in March, the trading volumes have not shrunk. Most of the Chinese gold investors already have some knowledge of the gold markets. For them, they believe they can make a profit even when the market is going down."
Let's check out the threshold for gold investments. There are now three banks selling paper gold in China, starting at 10 gram for around 2000 yuan. Real gold costs more. At six banks that trade gold bars in the country, at least one spends tens of thousands of yuan for a small gold bullion. But it will be very complicated when sell them back to traders.