Mineweb: They love gold and they’re trading gold – but will they buy more?

They love gold and they’re trading gold – but will they buy more?
By: Rhona O'Connell
Posted: '21-DEC-04 12:00' GMT
© Mineweb 1997-2004

LONDON (Mineweb.com) -- The gold market has long been seen as global, in the sense that gold can be totally anonymous and has been traded either as a commodity or a currency the world over for thousands of years. The recent proliferation of “formal” gold trading is a not a modern day phenomenon, as there have been commodities exchanges, on and off, going right back through history, with Commodities Exchanges in Amsterdam in the Middle Ages. This year, however, has seen a proliferation of announcements of planned new formal exchanges or trading centres.

We have already outlined the plans for the Dubai Commodity Exchange and its intention to commence gold futures trading in the first half of 2005. The National Multi Commodity Exchange of India is already operating gold futures contracts (fully computerised and online rather than open outcry). Now hard on the heels of these developments in Dubai and India come two more countries announcing plans for formal exchanges, in the shape of Pakistan and Vietnam. While these two countries are not among the world’s largest consumers in terms of overall tonnage, they are nonetheless enthusiastic for gold investment, being among the world’s heavier consumers of gold on a per capita basis.

The accompanying table shows overall tonnage in jewellery and bar hoarding form recorded by GFMS Ltd for 2003 in these countries (and for the world as a whole) and how they compare on a per capita basis. It shows quite clearly that the UAE, of which Dubai is an important part, is by far and away the heaviest consumer of gold on a per capita basis with a hefty 23.9 grammes, or 0.77 ounces, in 2003 (on a more comprehensive analysis, only Saudi comes particularly close, with 6.1g per capita). The world average, by contrast, is a mere 0.44g or 0.014 ounces while it the US it worked out at 1.21g per capita. These number s should be interpreted with caution, as some recorded UAE demand will be tourist purchase, as is also strongly the case in Turkey. Even so the fact that UAE offtake is more than 50 times he world average does talk to the love of the Middle East fro gold.

Country	Exchange	First Trading Date	Jewelry Demand	Bar Hoarding 2003 (source:GFMS Ltd)
			tonnes	Per capita
USA	COMEX	Dec-74	348	1.21
JAPAN	TOCOM	Mar-85	84.5	.66
TURKEY	ISTANBUL	Aug-97	155.8	2.24
CHINA	SHANGHAI	Oct-02	203	.16
INDIA	MCEX	2003	547.5	.55
UAE	DMCC	First half 2005	90.9	23.92
VIETNAM	HANOI, HO CHI MINH	Early 2005	58.8	.73
PAKISTAN	NCEX	Early 2005	59.5	.41
World			2715.1	.44