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Shanghai Gold Exchange looks to add members to International Board

Zhao Fanghua, managing director of the Trading Department for the Shanghai Gold Exchange, is in Australia to try and garner interest from miners in joining the exchange’s International Board.

The board, which was formed in September 2014, allows the trade and delivery of gold, silver and platinum.

According to Zhao, the initiative not only diversified China’s gold market, but also makes it the first financial market opened to the world.

“We are very interested to introduce the international board to the world,” Zhao said Oct. 10 at the Precious Metals Investment Symposium in Sydney. "We’ve done it in Europe and now we are here in Australia. It’s time that we come to Australia, a major producer, to introduce the international board.”

The Shanghai Gold Exchange has already met with representatives of the ASX in Shanghai.

“We hope something will happen,” Zhao said. “We don’t know, but the conversation and communication was very good.”

The exchange is also looking to other countries to grow its membership.

“We welcome all from anywhere in the world — from the mining industry, from the jewelry industry or the banking industry,” Zhao said.

Earlier this year, the Shanghai Gold Exchange launched a new benchmark price for gold bullion, giving the Chinese gold market a benchmark gold price quoted in Chinese yuan.

Since the platform was launched on April 19 until the end of August, 307.86 tonnes of gold equal in value to 83.66 billion yuan has been traded through the Shanghai Gold Exchange.

The aim of the platform was to challenge the benchmark price set in London, but Zhao sees it as more of a complementary than competing pricing system.

“We are just providing an avenue for the outside world to come to China to see the gold price on a different angle,” she said.

So far this year, the Shanghai Gold Exchange has surpassed 2015 turnover despite a decline in physical purchases.

Zhao said the exchange booked 3.8 trillion yuan in turnover in the first eight months of this year compared to 3.4 trillion yuan for all of 2015.

Physical metal withdrawals increased to about 2,582 tonnes last year, which Zhao said was due to lower consumption because of the higher expected returns from real estate rather than gold.

As of Oct. 7, US$1 was equivalent to 6.67 Chinese yuan.