Australia pushes further into $340b China gold market with new accreditation
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Australian gold players now have greater access to China — the world’s biggest market for the precious metal — after ABC Refinery achieved accreditation on the Shanghai Gold Exchange (SGE).
All sales in China’s gold market — which is worth more than $340 billion annually — must be completed through the exchange.
Established in 2002 under the close oversight of the People’s Bank of China, the SGE is now the biggest purely physical spot exchange in the world.
In 2016, the SGE introduced the Shanghai Gold Price benchmark to cement China’s role as a price-setter, to help the internationalisation of the Chinese RMB currency and broaden international participation in the Chinese market.
ABC Refinery is an independent precious metal assayer, refiner and mint and is the refining division of Pallion – Australasia’s largest independent precious metal services group of companies.
Gold is Australia’s second biggest export.
SGE-accredited gold bullion has to be a minimum of 99.99 per cent metallic gold purity and it has to meet some of the “toughest tolerances for impurities”, according to ABC Refinery.
Chinese demand for gold has risen from 7 per cent in 2003 and now accounts for more than 23 per cent of global demand today.
This growth is forecast to continue largely due to the increased spending power of China’s burgeoning middle class, which is forecast to swell to more than 500 million people by 2020.
ABC Refinery managing director Phillip Cochineas says taking Australian gold to the world’s largest physical bullion market reflects the strong long-term outlook for the precious metal.
The SGE traded gold contracts equivalent to nearly 6000 tonnes of the precious metal in 2017, equivalent to almost one quarter of the total global demand for gold last year, valued at more than A$315 billion.
ABC Refinery says it is one of only seven international companies to receive the accreditation and is Australia’s only independent refinery accredited by both the London Bullion Market Association and the SGE.
“This will form an integral part of the ‘One Belt, One Road policy’… and underscores the essential link between Australia as the world’s second largest gold producer and China which is the world’s largest gold consumer,” Haywood Cheung, president of the Chinese Gold & Silver Exchange in Hong Kong said.
China’s multi-trillion One Belt, One Road or “Silk Road” program is an ambitious initiative to build efficient trade corridors between China, Asia, the Middle East and Europe.