First analysis of Chinese move by Kedia Fincorp
Domestic Chinese demand becomes more “monetary” and less “gift-style”.
When you make standard bars tax-free and commemoratives 15%+profit more expensive, the smart buyer will shift to SGE-spec bars. That deepens the pool of good, uniform Chinese bars that can be re-used by banks and, if needed, by the state. That’s quietly bullish for real, mobilisable gold, not for fancy products.
It supports the SGE premium.
If retail is pushed into the VAT-free lane, more people are chasing the same narrow, standard pool. That can keep the Shanghai premium over London sticky or even push it up in tight-import phases — and remember, ICBC prices off London and references SGE, then adds only a small processing/circulation fee (3.5 yuan/gm) and takes just 2 yuan/gm on buyback, which is a very transparent, low-friction loop. That’s how you channel demand. (Your note about 109 yuan/oz add and 62 yuan/oz deduct shows exactly that funnel.)
It’s prep for wider RMB/gold internationalisation.
If China wants to use gold more actively in trade/settlement or to support RMB instruments, it needs clean, standard bars — not thousands of commemorative SKUs. Tax policy is the cheapest way to standardise the household balance sheet.
Indirectly supportive for global prices.
A big buyer (China) that keeps pushing its citizens into standard bars is effectively saying: “We will keep taking metal that the international system also recognises.” That tends to put a floor under dips because those bars are easily arbitraged between SGE and London when premiums widen. China already has leverage in London through ICBC’s clearing/vaulting role — that’s the “the guys who bailed out LBMA silver” angle you mentioned.
Bad news only for high-markup gold.
Commemorative/jewellery-style products in China stay a consumption good, not a monetary asset. Higher tax → lower resale value → wider dealer spreads. That’s China telling the market: “Speculation and savings should go into the monetary channel, not the gift channel.”
Bottom line:
This is not an anti-gold move. It’s a control-and-standardise move. China is funnelling household savings into bars that plug straight into its financial system and, when it wants, into the London system. That’s structurally gold-supportive, just not for the fancy stuff.
Author: Nitin Kedia
Founder at Kedia Fincorp & National General Secretary of All India Jewellers & Goldsmith Federation (AIJGF)
Disclaimer: Mention that the views expressed are solely those of the author and do not necessarily reflect the views of any affiliated institution or employer.
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