China has become the latest nation to introduce a gold dispensing vending machine, which was installed within the busy Wangfujing Street shopping district in Beijing on Saturday.
The machine is a joint collaboration between the Beijing Agricultural Commercial Bank and a gold trading company, and will allow customers to withdraw gold bars or coins of various weights based on the prevailing market prices.
Patrons of the machine must either insert or use a bankcard to withdraw the gold, with each withdrawal capped at 2.5 kilograms or one million yuan (US$160,000).
The Beijing Agricultural Commercial Bank hopes to expand the number of locations for the machine in China to other secure locations such as gold shops and upmarket private clubs.
The first vending machine on Wangfujing Street was made by German firm TG Gold Super Market, and will offer wealthy Chinese an attractive investment opportunity, especially after the Chinese government’s recent measures to discourage real estate investment and speculation to cool down property prices.
As the world’s second largest bullion consumer, the Chinese government is actively encouraging its citizens to purchase more gold in order to hedge against inflation.
In 2010, Chinese consumer demand for gold grew by 27 percent to 579.5 tonnes – according to the World Gold Council – as more Chinese sought to safeguard themselves from the uncertainty surrounding the global economy. India is presently the world's top consumer of gold, with a 66 percent increase in 2010 to 963.1 tonnes.
Although China’s gold vending machine may not be the first of its kind in the world – with a similar concept already in existence in the US, Abu Dhabi, Germany, Spain, the UK and Italy – the move is a significant step for the gold market in China, particularly since the government only recently allowed its citizens to actually own gold bullion.
Watch: Gold Rush in China