China sees gold-buying surge to hedge against declining dollar - report
Wednesday, December 15, 2004 2:16:28 AM
http://www.afxpress.com
BEIJING (AFX) - China is seeing a gold-buying surge as a hedge against the weakening dollar and negative real interest rates, the South China Morning Post reported, citing figures from the China Gold Society and analysts
The Hong Kong-based newspaper said the gold buying has prompted a booming trade not only in bars, coins and jewellery but also "paper gold", in which the investor does not take possession of the metal, but trades it like other financial instruments
Trading on the Shanghai Gold Exchange in the first 10 months of the year reached 515,447.1 kg, a rise of 45.35 pct over the same period last year, the paper said
In addition, Shanghai buyers snapped up all commemorative gold coins to mark the year of the rooster as soon as they came on the market last month
The price of gold reached more than 450 usd per ounce this month, its highest level in 16 years and up from 254 usd in 2001
"The weakness of the US dollar is the main reason for the rise in gold," Xu Ming, a gold specialist with the Bank of China, was quoted as saying
"A weak dollar is the long-term policy choice of the US government and governments are in the process of reducing their dollar assets. The European Central Bank will not intervene in the market. All this is putting pressure on the dollar." The paper said gold is one of a limited number of investment options for Chinese, who hold more than one trln yuan in simple bank deposits
This year thousands have reduced or closed their US dollar savings accounts in favour of yuan-denominated accounts because they expect a revaluation of their currency
The trading of paper gold is officially available only to residents of Shanghai with a current account with the Bank of China, which started offering the service in November last year.
China sees gold-buying surge to hedge against declining dollar
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15-12-2004 05:20
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