SILVER prices gained as the Shanghai Gold Exchange began trading in the precious metal yesterday under a trial program.

Silver for immediate delivery rose 5.5 percent to 3,459 yuan (US$438) per kilogram, while cash-deferred contracts ended the day at 3,374 yuan per kilogram, up 2.9 percent.

Cash-deferred trading allows investors to pay for a contract a few days after the transaction date, acting as an investment vehicle. Spot traders usually take delivery of the metal.

"Trading volume on the first day was light as bourse members showed caution because the technical network is still in its trial stage," said Dong Jianfei, a Shanghai Lao Miao Jewelry Co trader.

Spot trades totaled 90 kilograms, and deferred deals ran to 606 kilograms.

China is the world's biggest miner and exporter of silver, producing about 7,000 tons in 2005, or 10 percent of the global total, according to the Beijing Antaike Information Development Co.

Silver can be also traded outside the Shanghai Gold Exchange, which is the country's sole gold and platinum bourse.

The Shanghai White Platinum & Silver Exchange also trades spot silver, whose prices have gained 58 percent over the past year in the global market.

The gold bourse declined to say how long the silver trial will last before full operation begins.