According to a report by Bloomberg China could increase its gold demand by as much as 17% in the coming year. This figure apparently comes from Cheng Fumin the President of the China National Gold Group Corporation.

The Chinese demand for gold bullion is expected to rise form 300 tons to 350 tons this year. Here at gold-prices we think that these estimates are on the conservative side and expect the new Chinese middle classes to take a far greater interest in gold than any of the gold analysts are predicting.

The Chinese government have their own reasons for sitting on a pile of dollars but our feeling is that the private investors will think and act differently.

President Fumin has also indicated that China’s gold production may rise by more than 10% next year, which once again leaves a void to be filled. This can only be good for investors in gold mining stocks. We will monitor this situation closely.

04 December 2006