Saturday, September 20, 2014

Chinese Gold Demand 41t in week 37, 1331t YTD

The Shanghai International Gold Exchange Is Launched!

Jansen KoosKoos Jansen is an intrepid observer of the precious metals biz, especially in Asia.  He writes:  Where to begin. Much has happened this week in the Chinese gold market; on wednesday the Shanghai Gold Exchange (SGE) released multiple rule books written in English describing every detail on the workings of the SGE and its brand new subsidiary the Shanghai International Gold Exchange (SGEI). Finally the world can read everything about the Chinese exchange that is strongest force in the physical gold market, but was widely misunderstood because of the language barrier. Though having channeled unprecedented amounts of physical gold into China mainland the SGE has been enjoying little coverage in the mainstream media. 

Thursday September 18, at 8 pm GMT+8, in the Chinese night trading session, the SGEI was officially launched and started trading three physical gold contracts. On the next screen dump below we can see the first activities of the SGEI; iAu100g, iAu995, iAu9999 are SGEI physical gold contracts.  


The SGEI in the Shanghai Free Trade Zone facilitates physical gold trading in renminbi for international traders. This is a major step forward for the internationalization of the renminbi and its influence on the price of gold. But, while I'm still digging through all rule books and digesting them, I will write a separate post on the exact details of the SGEI and all that has changed in the (Chinese) gold market.

In its first trading session 121.72 Kg of gold changed hands on the SGEI - volume is calculated bilaterally in Shanghai.


One of the speakers at the opening ceremony of the SGEI was the governor of the central bank of China, Zhou Xiaochuan. Zhou stated:

This event is a major milestone in China’s opening of its financial market to foreign investors.

...Our Premier Li Keqiang came to the Free Trade Zone this afternoon as a show of encouragement for the unveiling and launch of the International Board. He also invited Mayor Yang Xiong and I to attend the launch ceremony this evening to offer his congratulations, as well as to express his hope that the International Board be shaped into a marketplace with global influence

...Gold market is an important and integral part of China’s financial market. We are now the largest gold producer, as well as the biggest gold importer and consumer in the world. In recent years, the People’s Bank of China has taken to heart the national policies and guidelines on greater reform and opening-up of our entire financial sector, and made steady improvement to laws and regulations of the gold market, promoted its well-regulated growth and development, and was the main driver in transforming China’s gold market from a market for commodities into a market for financial products; from a market for purely spot trading to a market offering both spot and derivatives trading; and from a domestic market into an international one.

... the International Board will bolster China’s gold market toward greater trading volume and centralization, further highlight the price discovery function of the gold market...

...People’s Bank of China will continue to support the sustainable growth and sound development of the China’s gold market.


For the remainder of this important report, follow this link.



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Trading gold, silver and mining shares since 1980 with a focus on taking advantage of volatility extremes, Gene Arensberg analyses the markets through a basket of technical and fundamental indicators and shares his findings from time to time here at Got Gold Report. Mr. Arensberg has been quoted in the Wall Street Journal, Dow Jones MarketWatch, USA Today and dozens of other news organizations.

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