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Chinese gold ETFs the trigger for an autumnal price surge?

By: Peter Cooper, Arabian Money


-- Posted Friday, 17 August 2012 | | Disqus

It was the launch of exchange traded funds that gave the gold price a huge hike in the last decade. Now China is poised to launch its first gold ETFs bringing this easy way to own gold to its population of 1.3 billion.

Huaan Fund Management and Guotai Asset Management are reported to have completed their plans for ETF products that will trade on the Shanghai Stock Exchange.

Major move

The China Securities Regulatory Commission has met with representatives of the bourse and the two fund management companies to discuss the launch. China is already set to overtake India as the largest consumer of gold this year.

Why is China keen to promote ownership of precious metals? Basically this is to diversify away from dollar-linked assets like its own currency in a time of financial turmoil and money printing.

Gold is a safe haven asset and a parachute from the Chinese bubble economy as real estate prices are collapsing in the major cities. Earlier this year a trader in the Sharjah Gold Souk told ArabianMoney that gold prices were going up because the Chinese are moving out of the dollar and into gold.

Gold bugs

The ETFs are a hugely important step down that road. This could double or triple Chinese gold buying. ETFs avoid the storage problems of physical gold and provide easy liquidity for investors.

George Soros and John Paulson, the legendary hedge fund managers, both invest in gold through ETFs for this reason, despite the small costs involved. Chinese buyers will also know a good deal when they see it!

How long before these Chinese gold ETFs are the largest in the world?


-- Posted Friday, 17 August 2012 | Digg This Article | Source: GoldSeek.com

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About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link




 



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