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The Mechanics Of The Chinese Gold Market

by Koos Jansen, Bullion Star:

My previous posts (part one, two, three) on the structure of the Chinese gold market I started writing a few years ago and additional information has been published in little bits and pieces all over my blog. The time has come for another comprehensive and updated post on the basic mechanics of the Chinese gold market.

According to my analysis the current structure of the Chinese market with the Shanghai Gold Exchange (SGE), launched in 2002, at its core has been designed by China’s central bank, the People’s Bank Of China (PBOC), (i) to manage the amount of gold added to Chinese (non-government) reserves, (ii) to grant all gold added to Chinese (non-government) reserves and traded in the Chinese wholesale market to be of the highest quality, (ii) to provide the Chinese people direct acces to the wholesale market. Sprouted from the centrally minded Chinese authorities, the SGE system was implemented to stimulate the citizenry to buy physical gold and to develop the Chinese gold market in order to support the internationalization of the renminbi.

Read More @ BullionStar.com

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