Gold council meeting seeking way to market deregulation
SHEEL KOHLI in London
The World Gold Council (WGC) is to host a ground-breaking meeting with officials from the People's Bank of China and other government departments in a move seen as a strong indication of Beijing's willingness to start slowly liberalising its gold market.
The meeting is regarded by the gold industry as the culmination of intense lobbying by industry bodies such as the WGC and gold-mining companies who are hoping liberalisation in the mainland will give a much-needed boost to the gold market.
Gold is trading at 20-year lows following the revelation last month that the Bank of England is planning to more than halve its stockpile to 300 tonnes.
Despite tight regulations in the mainland market, demand for jewellery - which makes up the bulk of gold holdings in the mainland - has risen more than sevenfold between 1989 and 1997.
Per capita consumption, however, is still only 0.2 grams compared with 0.6 grams in India and nine grams in Hong Kong.
The relatively low consumption levels in the mainland has seen it become a prime target for the industry.
The WGC believes the key to increasing consumption in the mainland will come from greater deregulation of the market. It is understood to have been providing examples of how central banks in other countries, particularly South Africa, have successfully deregulated their markets.
Gold-producers believe the meeting of the Gold Forum, scheduled for November, marks a strong commitment towards deregulation, given that it also follows a series of officially sanctioned training sessions and workshops, expected to take place in September, which is aimed at preparing mainland mining companies for free markets.