Private investors can now buy gold through the Internet in China. Online Gold Trading is the latest move that will bost gold deamand in China.
Individuals can now buy gold for investment online from the Bank of China and other selected banks which are members of the Shanghai Gold Exchange. By using Intrnet Banking, investors can transfer money from their bank account into a gold saving account, making gold trading more convenient.
Gold has always been revered in the Chinese culture. But not until 2003 have Chinese citizens legally been allowed to buy gold. One might think that 1.2 billion Chinese now able to invest in gold would have sent the gold price much higher. The reason it has not is until now is due to poor gold distribution. There hasn't been the resources to get gold to the people. Now the four major Chinese banks are providing customers with the ability to buy gold.
China has also recently cut the import tax on gold jewellery to 21.3 percent from 23.3 percent to help encourage foreign investors to set up jewellery factories as well as to boost China's gold consumption.
China is gradually liberalising its gold market, although a few restrictions including the import tax, remain. Local dealers in China still have to pay a 17% tax to import gold jewellery into China.
Currently China has one of the lowest gold ownership rates in the world with just 0.1 grams of gold owned per capita. In contrast gold ownership in India is 0.73 grams of gold per captia and the U.S. is 1.41 grams per captia.
Once Chinese banks increase distribution, a lot of gold will be sold in a relatively short time. This huge increase in gold demand in China has the potential to dramatically increase the gold price in years to come.