With three weeks still to go in 2014, trading volumes at the Shanghai Gold Exchange has already exceeded the total amount traded in 2013. In the first ten months of this year 12,077 tonnes of physical gold has been traded.

In 2013 China overtook India as the world’s largest consumer of gold, while Europe’s consumption continues to decline as physical gold continues to flow from West to East.

China wants to become the world’s premier gold centre and recently set up the Shanghai Exchange to attract foreign investors in the precious metals sector. For now London remains the centre for gold trading as the industry still uses the price determined in London to execute trades.

Once price discovery is determined in the physical market rather than the paper markets such as the Comex, many believe Shanghai will become the world’s most important gold exchange.