Asia's time has come as far as bullion market is concerned. Now, London's Dominance of gold bullion dealing worldwide faces a major challenge in the fast-rising Asian jewelry and investment markets.
Writing in The Alchemist magazine, Tim Wilson, managing director of metals at JP Morgan, which recently opened the first LBMA-linked vault in Singapore, said: Now is the time for the London bullion market to look to the traded gold market in Asia for its future development.
Asia accounted for 82% of Gold Bullion bar hoarding last year, Wilson notes, as well as the No.1 source of Gold Mining supply, China.
Most spectacularly, says the investment bank's metals MD, Population growth in the emerging markets is destined to have positive implications for gold demand because gold has a higher significance than in the Western world.
As a key example, Wilson cites Vietnam, where per capita Gold Bullion demand - whether as coins, bars or jewelry - is more or less on par with the German equivalent, although German per capita GDP is 40 times higher than that of Vietnam.
Meanwhile, the Singapore Mercantile Exchange (SMX) said it aims to gain market share by offering commodity contracts with the option of physical delivery in Asia, as opposed to just financial settlement.
SMX's first contract with that option will be for gold, which will be launched together with two financially-settled contracts, crude oil and one euro-dollar currency futures, for the exchange's debut on August 31.
SMX will have the opportunity to build a bullion storage facility in Singapore. Still, some traders were sceptical that this would help attract liquidity because of the growing popularity of exchange-traded funds (ETFs).
(Source: Bullion Vault)