The Shanghai Gold Exchange is working together with gold producers,
securities brokerage houses and banks in preparation for the launch of gold
bonds, the Securities Times reported yesterday.
Gold bonds are issued by gold mining firms and guaranteed by a certain amount
of gold they produce within a certain period of time in the future. The interest
rate of gold bonds is made up of a basic rate and a floating one. The latter is
linked with the gold price of the date of maturity. The maturation of the bonds
can be three years, five years or 10 years.
In recent discussions at a conference of Shanghai Gold Exchange members, the
exchange expressed hopes that gold mining corporations like Zhongjin Gold Co and
Shandong Zhaojin Gold Co can work with brokers and banks in developing gold bond
say last year, ICBC made contact with executives of Zhongjin Gold Co about the
bond issue, and both showed great interest. It is expected that Zhongjin may
become the first to issue gold bonds.
Meanwhile, Shenyin Wanguo Securities Co recently became the first securities
company approved as a Shanghai Gold Exchange member. The exchange plans to take
in more securities companies in an effort to build an underwriting system for
gold bonds issuance.
Preparations for gold bond issuance began last year, when Shenyin Wanguo
Securities Co, joined by institutions like Shanghai Gold Exchange and Shanghai
Financial Service Office put forward a gold coupon issuance plan. In December of
2006, Shenyin Wanguo formally applied to the China Securities Regulatory Commission to conduct gold bond
business. The application was approved recently.
According to industry insiders, although details concerning the bond issuer's
qualification and issuing quota are subject to the approval of the National Development and Reform Commission, there are no
policy-related barriers for gold bond issuance.
"As the world's third-largest gold producer, China has a huge potential in
gold production. The increasing financial needs of gold producers promise a
bright future for gold bonds," said Song Yuqin, vice manager of the Shanghai
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