China sets up largest gold sector fund for nations along ancient Silk Road

China has set up a gold sector fund involving 65 countries along the ancient Silk Road.  It has been set up in China’s northwest Xi’an city during ongoing forum on investment and trade.
The fund will be led by Shanghai Gold Exchange (SGE) and is expected to raise 16.1 billion dollars in three phases. It should be noted that it is the largest fund set up by China in the gold sector.
Around 60 countries which fall along the routes of 21st-Century Maritime Silk Road (MSR) and Silk Road Economic Belt have invested in the fund.
This fund will facilitate gold purchase for the central banks of member states to increase their holdings of the precious metal. It will be also invested in gold mining in countries along the Silk Road and also to increase exploration in countries such as Afghanistan and Kazakhstan
At present, China is the world’s largest gold producer and also a major importer and consumer of gold. But its share in international gold trade is very small and does not have a big say in gold pricing.
By setting up this fund China is seeking to increase the influence of its domestic currency Renminbi (RMB) in the international gold pricing by opening the domestic gold market to international investors.

Month: Current Affairs - May, 2015