New Benchmark a Sign of China’s Growing Role as a Gold Hub (Video)

Earlier this week, China launched twice daily gold fixing to establish a regional benchmark that will bolster the country’s influence in the global gold market.

What is the significance of the move?

Greg Collett, director of investment products for the World Gold Council talked with Kitco News about the new Chinese benchmark. He said it reflects the country’s growing appetite for gold and its increasing influence in the world market:

China is the largest consumer of gold in the world and this is just reflective of their growing place, and their growing demand for gold in China.”

Collett also discussed the current bull market for gold, pointing out that negative interest rates in Europe and Japan are a big driver, and that won’t likely change any time soon.

Highlights from the interview:

“We view this as a stepping stone to a multi-access trading market that will consist of London, New York and Shanghai.”

“China is the largest consumer of gold in the world and this is just reflective of their growing place, and their growing demand for gold.”

“Anytime you have further transparency and further insight into the market, you are going to see more investment products spring out of that. Also, one of the implications is that all commodities, gold included, have location based price differences. And so this will just allow investors to get a little bit of a better sense of what is the difference in price in China versus these other markets. “

“I think the timing is largely driven just by the increased demand coming from consumers in China, and again, just China’s growing presence in the market.”

“I think what we’re seeing is investors looking around the world and seeing that we have low to negative interest rates with so many bonds out there. When they see that, they say, ‘Well what role are those bonds playing in my portfolio?’ And the come to the conclusion that gold would probably be a better diversifier then having quite such a large bond portion to my portfolio.”

“Because we think these negative interest rates are one of the primary drivers of this gold demand, we don’t see that changing any time soon. So, I think it stands to reason that should carry on.”

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