Shanghai gold trading platform given surprise launch date

http://www.resourceinvestor.com/2014/09/16/shanghai-gold-trading-platform-given-surprise-laun

Shanghai gold trading platform given surprise launch date
BY MARK O’BYRNE
September 16, 2014 • Reprints

Tuesday the Chinese government backed Shanghai Gold Exchange (SGE) brought forward the launch date of its international gold trading platform which is hosted in the city’s free trade zone (FTZ). The gold trading platform will be known as the ‘international board.’

In a surprise announcement, the SGE said today that the international board will go-live this Thursday September 18, eleven days ahead of its original launch date of Monday Sept. 29.

Forty members of the Exchange including global banks UBS, Goldman Sachs, HSBC and Standard Chartered, will participate in gold trading on the SGE’s international board, trading 11 yuan denominated physical gold contracts including the large 12.5 kg (400 oz) bar, the ever popular 1 kg bar and a 100 gram contract.

The location of the SGE international board in the Shanghai free trade zone is symbolic in that this location has been earmarked by the Chinese government as part of financial sector internationalisation strategy.

The SGE is also opening a precious metals vaulting facility in the free trade zone with a 1,000 tonne capacity limit.

In a related development yesterday, the Hong Kong based precious metals trade organisation, the Chinese Gold and Silver Society (CGSE) announced that they have been given permission by the Chinese government to construct a precious metals storage vaulting facility in a special economic zone in Shenzhen in China.

The CGSE is the the first non-mainland entity to be given such permission. The CGSE’s vaulting facility will have a 1,500 tonne capacity and will be completed by late 2016 or early 2017.

Developments in the Asian precious metals markets are continuing to advance at a rapid pace. The pace of developments changes daily as illustrated by the acceleration this week of the Shanghai Gold Exchange’s international board.

Indian buying has remained strong throughout the period of weakening prices and the period of artificial demand constraints imposed by the Indian financial authorities.

In Asia gold demand remains an overall structural phenomenon, and is not purely cyclical.