The Fifth China Gold & Precious Metals Summit was held in Shanghai from December 1 to 3, 2010. The event was supported by the Shanghai Gold Exchange, China Gold Association, Istanbul Gold Exchange, World Gold Council (WGC), and National Spot Exchange of India. According to the organizers, the summit was attended by over 200 guests from around the world, 15 mining companies, 30 companies engaged in bullion operations, 20 commercial banks, 15 stock exchanges and several large investment companies.
This summit is the only international event in China, dedicated to the industry producing gold and other precious metals. Managers working in the industry were offered an opportunity to meet face to face and discuss their problems on a professional international platform to exchange experience. According to the organizers, the summit also provided an excellent chance to establish cooperation and expand relations between the participants.
The summit was marked by a variety of authoritative participants and the invited guests included the representatives of the Shanghai Gold Exchange, China Gold Association, London Bullion Market Association, World Gold Council, People's Bank of China, New York Mercantile Exchange, Shandong Gold Corporation, Shandong Zhaojin Corporation, China Gold Henan Company, Hong Kong’s HSBC, Deutsche Bank, Canada's Bank of Nova Scotia, Société Générale, Industrial and Commercial Bank of China, Minsheng Bank, GFMS, a British consulting firm specialized in precious metals, and many other companies and organizations concerned about the state of China’s precious metals market, its development trends and opportunities to meet the growing demand from Chinese investors on the backdrop of global economic recovery.
The discussions held at the summit embraced several major topics:
- Dynamics in precious metals trade, including China's strategy to turn into an international precious metals trading hub.
- Gold exploration and supplies. In this section, the speakers delivered reports on "Current situation and prospects of gold production in China," “Problems of the gold industry in China and strategy for their resolution – production deficit, lack of proven gold reserves, reducing the operating depth at mines and high costs of mining exploration,” etc.
- Development of investment instruments. This subject was discussed more widely since the development of this sector in China is still at an initial stage.
- Platinum and Silver.
- Jewelry demand.
- Prospects of industrial demand for precious metals from the automotive, medical and electronic industries.
According to the summit participants, China’s forecast demand for gold in 2010 will reach 500 tons going up to 600 tons in 2011. Investment demand is increasing rapidly as investors look for alternative ways to protect their wealth from inflation.
"The investment sector has grown significantly in the past three to four years," said Albert Cheng, Far East Managing Director of the World Gold Council. "Looking at ten years ago, the investment offtake was three to four tonnes. In 2009 it was 105.5 tonnes."
Cheng said this year's investment demand, calculated from sales of physical gold bars, could jump 50 percent from a year earlier. Total gold demand is seen growing about 20 percent in 2010, and at a similar rate next year, he added.
During one of the summit sessions on December 2, Xiangrong, president of the Shanghai Gold Exchange, said that China imported nearly 210 tons of gold between January and October in 2010, an increase of 480 percent (!) over the same period of the previous year. He said this was due to a very strong demand for physical gold.
It is no secret that China intends to outstrip India and become the world's largest gold consumer market in the coming years. It is surprising however that, according to some authorities in China, it has already happened. The Central Bank of China (officially called the People's Bank of China) informed that gold consumption in 2009 in China reached 454 tons, thus already surpassing India and putting China to first place in the world, People's Daily, the state-run news agency, wrote citing the summit materials. However, the statistics of the World Gold Council pointed out that gold consumption in India was 480 tonnes in 2009, more than in China. And it is noteworthy that for India, each year using 600-700 tons of gold, this amount is quite low and attributed to its exposure to the global crisis.
This is probably a simple mistake in the figures, or may be in this way China is already involved in "aggressive marketing", a game to forestall future events, trying to bring them nearer. And it seems that the main goal of the Shanghai summit on precious metals was to lay the groundwork for the world’s future largest international gold hub in Asia.
Olga Patseva, Editor of the Rough&Polished Asian Bureau in Shanghai
