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," according to Wang Chunli, general manager with the Caishikou Department Store.

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 per cent.

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 Wednesday'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 Centre.

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 Wednesday.

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 Wednesday. Compared with normal, the price is relatively high, hence the investing cost has increased now," Fan said.

(People's Daily December 19, 2002)