China’s state-owned ICBC Standard Bank has agreed to buy a massive precious metals storage business from Barclays. The deal is expected to boost China’s access to the London gold market.

The London vault, one of the largest in Europe, is in a secret location in London that can store 2,000 tons of gold, silver, platinum and palladium. At current prices ($1,300 per ounce) up to $90 billion worth of gold could be stored inside the London-based storage.

Gold has been traded in London for over 300 years. About $5 trillion in transactions were handled in London’s bullion market in 2015.

The world’s biggest bank by assets, ICBC will become the first Chinese lender to own a vault in London. The bank intends to expand its role in the gold business and will gain more influence in trading, pricing and storage of precious metals.

Last week, ICBC became a member of London’s precious metals clearing system where trades are settled. The purchase “enables China to better execute on their strategy to become one of the largest Chinese banks in the precious metals market.”

China is the world’s largest consumer of gold. According to Wells Fargo, the country now consumes about 40% of the gold mined around the world annually. Chinese imports of the yellow metal have surged over 700% since 2010.

RT.com / AA Magnum Business Analyst News 2018.

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