Gold bullion became available to Chinese individuals as an
investment option for the first time since 1949 as the small gold
bars began selling in Beijing Thursday.
The first batch of gold bullion went on sale to individuals in the
capital city's China Art and Crafts Plaza, Guiyou Plaza's
Jianguomen and Fangzhuang outlets, as well as Caishikou Department
Store.
The bullion was processed by Zhongjin Gold Co Ltd, China's largest
gold processor, and Zhaojin Gold and Silver Refinery Co Ltd.
"In addition to the pure bullion, Caishikou also sell the gold bars
with sheep patterns, which are a little more expensive because of
their decoration," Wang Chunli, general manager with the Caishikou
Department Store, told China Daily.
The gold bullion was divided into 11 categories, ranging from 10
grams to 1.25 kilograms, with the purity g of all reaching 99.99
percent.
Sources from the Zhongjin Gold Co say the price of gold bullion
will fluctuate with the Shanghai Gold Exchange (SGE).
The price of the bullion is decided by the cost of the raw material
plus a processing fee of 2 yuan (24 US cents) to 3 yuan (36 US
cents) per gram, with yesterday's bullion price at 92 yuan
(US$11.08) per gram.
"However, the retailing price cannot be as sensitive as SGE's and
the store will not change the price too frequently," said Wang.
An
official of Zhongjin Gold Co Ltd, who chose not to give his name,
told China Daily that Zhongjin just provided processing services to
the gold retailers, who have registered as members of SGE and got
approvals to buy raw gold in the market.
But the specification of the gold bars should be in line with
Zhongjin's standards and the Zhongjin brand must be stamped on the
bullions, to suit the international market and guarantee
quality.
"The buyers can sell back their gold bullions to Zhongjin and the
retailers to get cash at market price deducting agio (commission),"
said the official.
Xu
Shouxin, deputy secretary-general of the China Gold Association,
told China Daily the bullion sold on the market now was not
"investment" gold in the strict sense.
"SGE has not launched a business buying back individual gold and
the processing fee is still charged for the gold bullion," Xu
said.
Xu
believed it is just a transition period. And when the market fully
deregulates, the commercial banks are expected to become another
channel for gold transactions among individuals.
No
matter what insiders say, experts and individual investors regard
yesterday's sales as a milestone for China in providing another
investment avenue for the public.
"The opening of the individual gold investment business will
significantly boost gold demand in China, taking into account the
huge savings deposits of 1.3 billion people," said Liu Shan'en, an
expert with the Beijing Gold Economics Research Center.
Currently, the deposits stand at around 8 trillion yuan (US$966.5
billion), official statistics showed.
"Gold demand in the country will double soon from the current level
of around 200 tons a year as a result of the opening of the
business," said Liu.
Last year, gold consumption reached 213.2 tons, the fourth-highest
level in the world.
In
China Art and Crafts Plaza, ordinary Chinese people crowded to buy
the small gold bars, while the pure 10-gram ones were hot
sellers.
But some cautious investors did not pay much attention to the gold
bullion yesterday.
Fan Xinyi, who strolled at the Caishoukou Department Store
yesterday and has invested in five-year stocks, told China
Daily that she was considering buying gold as another
investment because there were too many uncertainties on the
domestic stock market.
"However, I will not buy today, you see, the gold price in SGE has
exceeded 90 yuan (US$10.84) per gram yesterday. Compared with
normal, the price is relatively high, hence the investing cost has
increased now," Fan said.
(China Daily December 20, 2002)