Gold News

Gold Trading "Imminent" in China's New Shanghai Freezone

No.1 producer & consumer "must fight for voice" in international gold trading...
 
GOLD TRADING is "imminent" in China's new international freezone, according to press reports, with the Shanghai Gold Exchange seen leading the internationalization of financial markets in the world's second-largest economy. 
 
With Beijing still tightly controlling inflows and outflows of currency, the launch of a gold trading contract for foreign holders of so-called "offshore Yuan" has been rumored for Shanghai's free-trade zone since January.
 
Now the People's Bank of China is said to be reviewing specifications for a trading contract from the Shanghai Gold Exchange, "and an imminent approval is expected" says the South China Morning Post, citing officials.
 
"Gold will be an ideal trading product to spearhead the efforts to internationalise all kinds of exchanges in the free-trade zone," the SCMP quotes Industrial Bank analyst Jiang Shu.
 
Twice in the last decade, senior figures from the People's Bank have told the London Bullion Market Association how gold trading "plays a very important role" in the politburo's long-term plans for China's financial market system, most recently at the LBMA's 2012 conference in Hong Kong.
 
Now gold trading " could trigger a large turnover when the international players come," says Jiang.
 
The world's No.1 in both gold demand and mining output, "China must fight for a voice in the international gold market," says Tan Weihuan, chief researcher at the state-approved China Gold News site.
 
Comparing the planned Shanghai offer with London's bullion market – part of the UK capital's "international financial center" – "Gold trading settlement must be flexible, convenient and fast," says Tan.
 
What's more, "Gold is denominated in US Dollars." So if the Shanghai freezone's gold trading "offers only Renminbi [aka Yuan] settlement, at least for now the scale will be limited."
 
Globally, said the SWIFT payments processing association earlier this year, the Chinese Yuan is used for only 0.8% of transactions.

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