Bank of China starts gold trading
( 2003-11-19 10:42) (Shanghai Daily)
Individual investors traded some 1,869 grams of gold bullion for the first time yesterday on the Chinese mainland since the establishment of the People's Republic of China in 1949.
Bank of China, the only bank permitted to trade gold on the Shanghai Gold Exchange on behalf of individual investors, said that 19 deals were conducted yesterday, with the largest single transaction at 500 grams.
China's largest foreign exchange lender has set 10 grams worth of gold as the minimum for individual investors to trade on the exchange with the bank acting as an agency.
"The entry standard of 10 grams of gold, or equivalent to more than 1,000 yuan (US$120.50), is low and it will provide local residents another channel of renminbi investment," said the BOC in a statement.
Though the price of gold per gram closed at 105.29 yuan yesterday, compared with the opening rate of 105.45 yuan, an analyst at the bank said that investment in gold trading could give returns over the long term as the current gold price is seen to rise.
Now, mainland Chinese are only allowed to trade gold through deposit accounts in the Bank of China, which is called "paper gold," instead of buying or selling real bullion.
"It's a good news for China's individual investors who have a unique passion for gold," said an unidentified industry insider, who has been doing the business for nearly a decade. "The bank's new business has provided people a new investment alternative."
China's gold market was controlled by the People's Bank of China, the central bank, for decades until late last year when the Shanghai Gold Exchange officially started operation to allow gold producers, corporate user and banks to trade the precious metal.
It signals the country's deregulation of the market.
"Actually, as long as we can make profit through the trading, there is no difference between paper gold or handling the real gold in our hands," said Edward Hu, an official with Shanghai Foreign Service Co Ltd.
The Industrial and Commercial Bank of China, the China Construction Bank and the Agricultural Bank of China also applied for approval to act as agencies for individual investors to trade the precious metal.
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