I have been studying the Chinese monetary and gold policy for a number of years and have learned essential information hasn’t been covered by Reuters and Bloomberg. The fact that the most important pieces of information are only available in Chinese, explains why it doesn’t show up in google searches. (No, google translation doesn’t cover this yet unfortunately).

That’s why information on the Chinese gold market, based on newly translated Chinese documents, is so important to understand the full picture. My Dutch friend and blogger @koosjansen has been responsible for many translations in this respect, through his contacts in mainland China. They were a great benefit for me when writing about the Chinese monetary policy in The Big Reset.

Koos has just published  ‘a detailed policy memo from the country’s highest government to let the various ministries and department know of the direction, intentions, progress and steps of development of the many facets and components of the gold market that serves both the gold industry and other areas of finance.’ Written in 2012. 

It can be seen as the official manual for the development of the Chinese gold market and includes the opinion’s of;

• People’s Bank of China (PBOC)
• National Development and Reform Commission (NDRC)
• Ministry of Industry and Info Technology of the PRC (MITT)
• Ministry of Finance (MOF)
• State Administration of Taxation of the PRC (SAT)
• China Securities Regulatory Commission (CSRC)

The Chinese even state gold should be accumulated to ‘raise investment returns and protect our wealth assets.’ Well that’s what we try to do in our Commodity Discovery Fund as well

Here the most important segments;

• The gold market is an important component in the make up of financial markets. Gold has both financial and commodity attachments.
• Good efforts to develop the gold market will enable it to play a unique function not found in other financial assets, complementing and helping the other markets in finance, completing our financial system helping in both breadth and depth, raising our market’s competitiveness and readiness to respond to crises, contributing to stability and security of our finances.
• Developing our gold-related industries will not only help raise the competitiveness of these industries, but also help other mining and resource industries. Since the reform started, our gold industries have developed steadily along the supply chain which includes exploration, mining, refining, trading, investment, value-added and retail sectors. A well-functioning gold market can help these sectors in financing needs, risk management, cost-lowering, supplying market information to these enterprises, helping them make production and operation plans, thus help restructure and raise the standard of these industries.
• The tradition of gold investment and consumption is with our people/citizens. As the private sector grows at speed and living standard upgrades, private demands for gold jewellery, coins and investment gold are also growing quickly. A gold market with a rich diversity of products will help develop new investment channels, satisfy the varied demand, help investors make appropriate asset allocations, raise investment returns and protect our wealth assets.
• After replacing the previous collective-buying practice policy, our gold market has developed speedily; the coordinated development of the gold industry supply chain have started to form, with the contribution in the business developments of the Shanghai Gold Exchange and the commercial banks and the Shanghai Futures Exchange. 
• As soon as possible, the SGE needs to clarify and establish plans for the future market development and positioning of itself, improve and strengthen its service offering structure..We need to strengthen and improve areas of trading, gold-cash settlement, assaying and certifying of gold quality, the vaulting and shipment of gold. We need to study in depth the nature of the evolution of the gold-related industry and the gold market, so that the SGE can play its important role in promoting the healthy development of the gold market and related infrastructure building.
• The SHFE should make full use of the future market price discovery (we should not be dependent of US manipulated (COMEX) prices – wm) and its function to manage risks to steadily and advance the healthy development of our gold risk-management market, adding to fundamental policies framework supporting the gold market. With the central aim of letting the market do its proper job, we need to make good and keep good the policies and regulations towards gold futures contracts and related businesses, making the gold futures market deep and with attention to details, thereby raising the level of service towards the broader private sector economic development.
• We also need to look at and make good the structure/composition of gold investors. Support gold enterprises so they can actively participate, using the futures market to protect values across time. Actively guide other financial institutions to use the gold futures market to manage risk.
• Commercial banks should look towards the entire supply chain from gold mining to fabricating and value-added processing to final sales, practically innovate new financial products that are effective in helping each area in the chain with financial service. We need to cater to the needs of enterprises and market development at the same time, be innovative in developing business areas of physical gold sales, gold leasing, futures and options on futures too, enrich the product range, so as to satisfy the financing needs and risk-avoiding needs of enterprises. Encourage and guide commercial banks in developing RMB-denominated gold derivatives trading. Guide more financial institutions to make use of the gold market, broaden and deepen our gold market.
• Build and strengthen  gold market system infrastructures. The SGE needs to further strengthen its trading infrastructure, be innovative, complete the gold market system. Introduce and enrich different models/modes of trading, introduce market maker system, raise the liquidity of the gold market. Speed up work on disaster-recovery systems, bring back-up systems up-to-speed. Further improve cash capital management systems, secure and protect customer funds.
• Make a good vaulting-transportation system. Consider all the factors relating to the gold production and actual consumption of our country, set up a good system of settlement vaults. Collect and consider the business costs of our commercial banks and members, set reasonable (standard) fees for moving gold in and out of vaults, and storage fees. Set up good transport system network, prepare low-cost, high-speed efficient service of transportation to the market.
• Perfect our settlement service systems. According to the needs of the market, practically improve the system infrastructure of gold account services, offer more convenient and fast physical gold settlement and gold accounts to the market. Learn from the experience of the international market, investigate and propose multi- and different types of gold account services. Improve the gold market’s capital settlement services.
• Look into broadening supply channels for physical gold for the gold market. With respect to actual market needs and how our gold markets are, increase the number of commercial banks qualified to do import-export business, help the market to become innovative, raise the level of liquidity in the market. Develop the gold leasing market based on free market principles.
• Work on and improve the gold market financing services. According to applicable credit policies and principles, commercial banks needs to increase the access to amount of credit for qualified large enterprises that fit the gold supply chain plans for development of our country. Give special support to large-scale gold enterprise groups’ development to aid them to achieve the strategy to “go outside” into the international arena, and help them with related gold financing service business that they have. Support these groups when they issue bonds, short- and intermediate-term notes for lowering financing costs. When suitably qualified enterprises engage in mergers or acquisitions, help them with loans to aid industry restructuring, to simplify the business and achieve better scale effects. Regarding value-added processes and retailing, take note of each of their business characteristics including cyclical features, help form a financial services system that takes care of their needs from liquidity all the way to final sales.
• Move the gold market towards external openness. Steadily increase the number of foreign members of the SGE. Look into allowing off-shore qualified ingot suppliers to supply to the SGE. Look into allowing off-shore institutions to participate in SGE transactions.

All above is another confirmation of the recent Chinese gold policy changes which will have it’s effect on the coming monetary changes worldwide.

The following part struck me most as it explains why the Chinese are so eager to publish a Chinese edition of The Big Reset, filled with at least 60 pages on the history of ‘gold markets’.

‘We need to study in depth the nature of the evolution of the gold-related industry and the gold market, so that the SGE can play its important role in promoting the healthy development of the gold market and related infrastructure building.’

Thanks Koos. Keep up the great work!