By Sam Chee Kong
China had been promoting the ownership of Gold among its citizens for the past two years. China has installed its first Gold Vending machine on the 1st week of October, to join other countries such as USA, Germany, and the United Arab Emirates in hosting an ATM machine that dispenses Gold coins and bullion.

The public can now purchase certified gold coins with credit cards and cash through such machines. The Chinese government is keen to promote the sales of gold in the country and its effort has seen an increase in demand for gold by 27% last year.

A report by World Gold Council in May 2011, showed that China has taken over India as the world’s largest gold consumer, consuming about 91 tons which translates to about an increase of about 21% year on year.

Such a move to promote savings among the public is of vital importance.

By raising the ownership of gold among its citizens, China is essentially ‘killing two birds with one stone’.

ONE, it will help to balance off China’s low Gold/Forex Reserves.

If you look at the World Gold Council’s Dec,2010 chart for Gold/Forex reserves below, you will notice that the biggest holder of gold/forex are the Eurozone countries and US.

Asian countries have the lowest Gold/Forex ratio even though China, India and Japan have one of the largest tonnage of gold in its reserve. China’s Gold/Forex ratio only stands at 1.7%.

TWO, when the PAGE (Pan Asian Gold Exchange) starts trading in June, it will put tremendous pressure on the price of gold in the physical market because investors are able to receive physical gold. When the price of Gold rises it will automatically recalibrate upwards the wealth of millions of Chinese who invested in Gold during the past two years. And it will also automatically increase the standard of living of millions of Chinese.

One thing for sure is that PAGE is preparing the world for a Chinese World Reserve Currency, in this case the Renminbi.

PAGE will help rectify the current imbalances in both gold and Silver prices. Their prices had been artificially held down illegally for years by banks and brokerages. Food for thought, imagine what will happen to the price when only 1 % of the Customers in Agriculture Bank of China (3.2 million) purchased one mini contract of gold and silver?

A 10 ounce Gold mini contract times by 3.2 million is equivalent to 32 million ounces of Gold and a 500 ounce Silver mini contract times by 3.2 million is equivalent to 1.6 billion ounces of silver. What will this do to prices of Gold and Silver?

On top of this, there is the Pan Asian Metals Exchange (PAME), which has already made its debut July last year. Since its inception last year, six non ferrous metals have been introduced to the exchange for trading namely silver, indium, germanium, tungsten, beryllium and silicon. This is part of China’s 12th five year plan to gain control of the Global Metals Trade.

A final note, this important development will definitely be the ‘Game Changer’ of things to come and definitely cannot be taken lightly