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Country bags the silver in gold sales
Last Updated(Beijing Time):2008-02-20 10:22

The stock market boom in 2007 has pushed the gold rush in China to a feverish pitch.

Latest figures released by the Shanghai Gold Exchange (SGE) show China has overtaken the United States as the world's second biggest market for the metal, after India.

Sales of gold and gold jewelry on the mainland in 2007 reached a record high of 326.1 tons, or 316.49 trillion yuan ($44.26 trillion), up 62.51 percent from 2006. Daily trading volume amounted to a record 7,554.26 kgs, with the highest reaching 24,767 kg.

Shen Xiangrong, chairman of SGE, said the gold market enjoyed a "good momentum". He noted that domestic gold prices have become more closely linked with the world markets.

The demand for gold was further pushed by the intensive marketing efforts of the SGE and the active participation of various banks in trading gold on behalf of their clients.

These banks included ICBC, Industrial Bank, Huaxia Bank, Shenzhen Development Bank and Kunming Commercial Bank, which have all established agency business in gold trading.

SGE statistics showed the trading volume from these bank agencies reached 17.33 tons, an 185.03 percent year-on-year rise. The SGE simplified the trade flow and reduced the commission charges.

In addition, at least two foreign banks - HSBC and Standard Chartered - have been admitted as trading members of the SGE.

"Gold is doing well when the stock market is doing well," said Philip Olden, chief marketing officer of the World Gold Council (WGC).

WGC is a London-based marketing organization promoting gold trading around the world.

Chinese gold consumers are not very sensitive to price rises, compared with other big gold consumers such as India, he said.

"2007 was a great year for the gold market in China," said Albert Cheng, managing director of WGC's Far East Region.

The rapidly rising purchasing power of Chinese consumers and the growing appetite for investment opportunities are expected to continue to push up the demand for gold, analysts predicted. Rising gold prices, they said, have the effect of attracting more investors to the metal, especially at a time when the stock market is clouded by concerns of a possible slowdown in the global economy.

"Investment demand will remain robust in the early part of 2008 as long as the current financial and economic worries and dollar weakness continue," said James Burton, CEO of WGC.

WGC has placed strategic importance on the development of the Chinese gold market since 2002, emphasizing on the improvement of the quality of gold jewelry and the removal of barriers to gold investment. The council has introduced various promotional activities and made efforts to offer Chinese consumers a greater variety of products.

"The annual gold sales volume of over 300 tons has led us to a brand new starting point," said Roland Wang, WGC's general manager. "Now we are shouldering more important missions and will lead the Chinese gold market toward a brighter future," he said.

China was the third largest gold producer in the world in 2006, when total output amounted to 240.08 tons, up 7.15 percent from a year earlier. Industry experts estimated that by 2007, China should have overtaken South Africa as the world's biggest gold producer.

Source:China Daily 
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