China Gold ETFs

China is set to introduce its first gold ETFs backed by physical bullion as early as this year, the Financial Times reports, citing the World Gold Council.

“The launch of gold ETFs in China has been hotly anticipated by some gold bulls, who believe it could trigger a new wave of demand for the precious metal,” the newspaper reports.

The amount of bullion held by gold ETFs listed around the world increased 274.9 metric tons over 2012, reaching a record 2,632.5 tons on Dec. 20, or the equivalent of a year’s worth of mining production. [Gold ETFs: Bullion Prices Up for 12th Straight Year]

SPDR Gold Shares (NYSEArca: GLD) is the largest such ETF, controlling 1,326 metric tons of gold, or more than $70 billion of assets under management.

Marcus Grubb, managing director for investment at the World Gold Council, said new rules adopted last month by Chinese regulators “effectively paves the way for physical commodity ETFs,” according to the FT report.

“Where ETFs are likely to score highly in China is with larger scale investors such as institutional or sovereign wealth,” he added.

Full disclosure: Tom Lydon’s clients own GLD.

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