SBV’s golden market measures

Why did the State Bank decide on experimenting with conducting national gold bar bidding on March 1, 2013?

The trial is important as it was the first time the State Bank got involved in a gold tael bidding session. We expect the gold price will soften session after session, gradually driving domestic bullion prices closer to that of the world market.

Of course, businesses and banks coming under the bar are welcomed to join the session.

Why only one tael SJC gold bars, but not all SJC gold bar types were eligible for transactions in bidding sessions?

All items joining the bid must be standard ones. Gold is a special product as it is handled in big volumes with swift delivery terms, so standardising the gold joining bidding sessions is of foremost importance.

Market players suggested SBV use one-tael SJC gold bar type to make it  convenient for transactions and delivery.

The one-tael SJC gold bar transaction regulation only works in wholesale market, whereas other types of gold bars could still transact as usual in retail market between business/credit organisations with people.

Banks and firms argued that two days for delivery after payment was made right at the bidding session would cause losses to businesses. Will the regulation be amended to support firms?

We had discussions with firms and credit organisations. In principle, delivery may take place two days later after payment is made but in fact, it may occur three hours later after payment is made.

The State Bank joining the bidding session was to shorten the price gap in domestic and world bullion market. What will the  SBV do when the target is reached?

The SBV is preparing all necessary procedures to be able to directly partake in bullion market transactions in the role of market maker.

In the initial stage, the SBV mainly holds bids to sell gold. Accordingly, it will feed the market with huge volumes of gold bars to balance market demands, from there shortening the price gap.
The difference in domestic and world market bullion prices may plunge after June 30, 2013 when banks close their gold positions.

Around 10 credit institutions have yet to close their gold positions at present, but the gold deficient amounts have reduced sharply than previously.

Banks got the nod for temporary export-reimport of nine tonnes of non-SJC gold to turn into SJC gold. When will this gold reach the market?

Credit institutions made the proposal to have sufficient gold volumes to pay back depositors. Conversion process is now underway and will complete three to four weeks later.