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Vivian Ni from China Briefing.com
reports on the creation of China’s Pan Asia Gold Exchange and its
future role in the marketing of Gold to the Chinese people.
“ In an age when
the assets of insolvent Western economies are becoming less reliable and
international investors appreciate gold as a safe haven, the Chinese know it
is time for them to play a larger role in the global gold market. The Pan
Asia Gold Exchange (PAGE) – opened earlier this year allowing gold
trade in China’s own local currency RMB – may make China the new
epicenter of the global gold market and even trigger a bigger wave of
speculative gold buying and selling.
Established on March 31 this year, the
PAGE is located in Kunming, the capital city of China’s southwestern
Yunnan Province (an area well-known as a major gateway to Southeast Asia).
The new gold exchange – which markets itself as China’s
“gold supermarket” – will allow individuals to buy physical
gold or speculate in gold future contracts through an RMB account with a bank
or broker. Initially, all the clients of PAGE’s two settlement banks
– the Agricultural Bank of China and Yunnan’s local Fudian Bank – will be able to buy 10-ounce T+D
contracts on the PAGE.
While average Chinese citizens have
already gained access to purchasing and owning physical gold with the opening
of the Shanghai Gold Exchange in 2002, the new exchange in Yunnan will enable
people to buy gold and silver more easily at home from their computers,
according to analysts.
International investors will also find
access to the RMB through these gold contracts once they are allowed to
purchase International Spot Contracts on the PAGE.
In addition, the PAGE aims to establish
an over-the-counter gold market, where its gold price fixed at 8:00 a.m.
every morning local time will be recognized as the daily opening price of the
global gold market.
A recent Forbes magazine editorial
written by Robert Lenzer believes the impact of the
PAGE will be huge, because it will enable the RMB – instead of U.S.
dollars – to become the dominant currency in one of the most important
speculative commodities for the first time. Furthermore, the PAGE’s
integration with global gold market operations will likely head the spot
market in gold for China away from London’s Metals Exchange or the New
York Mercantile Exchange and Commodity Exchange (COMEX).
The PAGE may also rise as an alternative
playing field for global gold investors because of the potential changes it
brings to the existing mechanism in dominance. On PAGE, a gold buyer will be
able to receive a 90-day International Spot Contract and actual title to the
gold he/she purchases, while currently, the spot price of gold is still greatly
impacted by London’s futures market. For every purchase of paper gold,
both the London Bullion Market Association (LBMA) and COMEX are supposed to
only have 10 percent allocated contracts backing them, and the other 90
percent is held in unallocated accounts.
Analysts looking on the bright side
believe the emergence of the PAGE will help break the LBMA members’
market monopoly and bring greater transparency to the market as gold will be
priced in terms of an alternative currency.”
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