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« Gold in a Bubble? | Main | Looking for Hui »
Wednesday
Mar302011

China TV reports gold sales ‘going through the roof’

Chinese Gold Buyers 31 March 2011.JPG
China is one of the world's top gold markets, owing to its growing middle-class consumption and reliance on gold as a traditional hedge

This article was kindly sent to us by Lawrence Williams of Mineweb regarding the increase in demand for gold in China, it also contains a short video clip of just over one minute which may interest you.


It appears that Chinese gold demand continues to run at a very high level with fabricators reporting difficulty in obtaining sufficient supplies for their businesses.  China's English Language TV station, part of state-owned CNTV, reports that gold demand is going ‘through the roof' despite the post Chinese New Year period usually being a slack one for gold sales and China itself nowadays being the World's top gold producer.

One gold fabricator interviewed on the television program reckoned his business has been increasing by 20% a month over the past two years, while the sellers noted that they were having to ration sales due to the gold shortages.

While the newsreader got her statistics wrong on both supply and demand (probably by a factor of 1,000 in each case) it does appear from the report that demand is currently exceeding supply by around a little under two times.

Last year Chinese demand for gold seemed to accelerate month by month as the year progressed and then appeared that it may have peaked immediately ahead of the Chinese New Year in early February.  The latest report, which was aired last week and  which can be viewed here

suggests that the end of the New Year celebrations has not signified an end to this seemingly ever-growing demand.

The Chinese authorities are worried about importing inflation, largely as a result of Quantitative Easing programs in the U.S. and Europe and indeed reports from that country already report to an escalation in prices of consumables in particular.  While the country's economy continues to grow at around 10% a year the government may be able to keep a lid on any resulting unrest but should the economy slow substantially, this may not continue to be the case.  Meanwhile the ever-growing Chinese middle classes, which have a penchant for saving, seem to be putting their money into precious metals rather that trusting in the domestic stock markets which are seen by many as over volatile.

There is little doubt that thus China is an ongoing driver of gold demand and of the price, replacing to an extent the huge volumes of investment gold purchased in Western nations - notably in the form of gold ETFS - over the past couple of years.  One should not underestimate the effect on the global gold market of the Chinese middle classes' purchasing power - an element in gold demand which was not with us at all as recently as only a couple of years ago.

So there you have it, the insatiable demand continues in China, where a huge population is encouraged to invest in gold, soon be pushing towards and through $1500/oz.
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SK Chart with profits re-invested 29 March 2011.JPG


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China map 31 March 2011.JPG




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April 8, 2011 | Unregistered CommenterJohn Ell

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