Gold trade booms on weak dollar

A weakening dollar and negative real interest rates is driving a rush to buy gold among Chinese investors, the South China Morning Post reported. Trade in gold bars, jewelry and coins as well as "paper gold" where the investor holds the gold only in paper form has all boomed in recent months. The paper cited figures from the China Gold Society showing trading from January to October on the Shanghai Gold Exchange had reached 515,447.1 kg, a rise of 45.35% year-on-year. That has also created a big return for Chinese gold producers who have seen profits in the first three quarters of 2004 rise 35% from a year earlier. In recent years the government has moved to liberalize the trade in gold after holding the metal as a state monopoly for 50 years. Several banks now offer gold trading services with many others awaiting approval for licenses to do so.