Gold bracelets, watches and earrings are often marks of wealth.

But gold trade is something entirely different.

It's a game full of risk, and profits can be elusive.

Gold trade also is becoming less elitist.

For quite some time, the Shanghai Gold Exchange (SGE), administrated by the People's Bank of China, was only open to companies and institutional investors.

But on Christmas Day, 2006, both institutional and individual investors were welcomed to buy and sell a new product, known as Au100g, which lowers the market access from 1 kg to 100 grams. This is significant because it means the SGE has formally opened its gold trade business to individual investors. Therefore, more citizens can trade gold in the financial market.

Understanding the trade

Cheng Fumin, President of the China Gold Association, noted that the annual Chinese demand for gold is about 200 tons, 95 percent of which is used for making jewelry and 5 percent is for investment. After the gold market is opened to individual investors, the gold used for investment is estimated to account for 15-20 percent of the total demand.

At present, the Industrial and Commercial Bank of China (ICBC) is connected with the transaction system of the SGE and publishes the market ups and downs. Meanwhile, ICBC acts as an intermediary for both sides.

After a deal is closed, investors have two choices. First, they can invest in the same way as paper gold. ICBC stated that in order to encourage Chinese citizens' enthusiasm to invest in gold. ICBC should adopt favorable measures like eliminating gold storage fees. The second is that they can withdraw gold from the market, but they cannot re-trade the withdrawn gold in the market. But Cheng Fumin said after a complicated set of procedures, the withdrawn gold can be re-traded in the market.

Fully opening soon

According to SGE regulation, individual investors can trade gold by becoming a registered member with SGE. Individual investors must open a gold trading account with the SGE with their real names. Then, the registered members can apply for opening an account in the SGE for the individual investors. Individual investors should apply to members of the SGE for withdrawing gold. The gold can be withdrawn by members of the SGE, and individual investors can pick up gold in Shanghai, Beijing and Shenzhen.

Currently, members of the SGE are divided into three categories, including 20 financial members like commercial banks, 120 comprehensive members like the China Gold Group and nine other members. Those members are approved by SGE and are authorized to offer investors gold transaction services and get commission fee. The commission fee is set by authorized members and should be at most 0.15 percent.

"With the opening of the individual gold market, the re-adjustment in the SGE member structure will take place soon," said Niu Ye, an analyst with Flying Fund, an investment consultancy.