China establishes huge gold fund to increase influence in global gold markets

China establishes huge gold fund to increase influence in global gold markets

27 May 2015, 10:13
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China has founded its largest gold-investment fund in history, totaling 100 billion yuan ($16 billion), which aims to invest in mining projects in the region and strengthen Chinese influence in global gold markets.

The fund's founding took place in Xi'an - the historic starting point of the Silk Road.

Led by the Shanghai Gold Exchange, the "Silk Road Gold Fund" will mainly be focused on investing in gold projects as part of China’s “New Silk Road” push to deepen economic ties with other countries in the region, particularly those along the ancient Silk Road trade route linking Eastern and Western Asia. 

Among major stakeholders in the gold fund, Shaanxi Gold Group and Shandong Gold Group own a combined 60% stake, while Shanghai-listed Industrial Bank Co. and Sichuan Western Resources Holding Co. hold 15% each, the report said.

As Chinese media reports, the new fund would be used to invest in gold-miner stocks and to establish gold exchange-traded funds, as well as to purchase stakes in gold-mining projects and firms in the New Silk Road area using private-equity and venture-capital methods.

Economist Song Qinghui noted Wednesday that the body could also boost China's power over the global gold market and could increase the use of yuan in pricing gold, the National Business Daily reported.

Additional funds, possibly aimed at transportation and other infrastructure investment, may be set up in the future, the report said.

As MarketWatch notes, in recent years, gold demand in Asia has accounted for more than 70% of the global total, and the gold-rich Central Asian region lacks strong exploration and mining skills.

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