Pile of gold coins

China has set-up a new $16bn mining fund for investment in gold mines to increase the country’s trade influence of the metal.

The fund will be run by a new company, and would be used to develop gold mining projects along the planned silk road infrastructure that is being developed by the country.

Shanghai Securities News reported that 60 countries are said to take part in the fund that is expected to raise the amount in three phases.

The proposed silk road will run through Kazakhstan, Uzbekistan, Iran, and Turkey.

The fund aims to develop gold production for trading on the new Shanghai Gold Exchange.

"Central banks will be able to buy gold locally for their reserves using this fund."

In addition, central banks will be able to buy gold locally for their reserves using this fund.

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The fund will be 35% owned by Shandong Gold Mining’s parent company Shandong Gold Group and 25% by Shaanxi Gold Group.

Financial institutions would own the remaining 60%.

Shanghai Gold Exchange said that the fund would facilitate gold purchase for the central banks of member states to maximise their holdings of the precious metal.

Claimed to be the world’s biggest producer of the metal, China was the second-biggest consumer of gold jewellery, bars and coins in 2014.

World Gold Council data shows that in the first quarter of 2015, India was replaced by China in terms of gold buying.

Image: The $16bn fund is intended to be used for developing gold mining projects. Photo: courtesy of foto76/ FreeDigitalPhotos.net.