The future demand from China bodes well for gold prices as over the years China has no longer is an exporter and her internal requirements for gold are set to outstrip domestic gold production.
SHANGHAI (MarketWatch) -- Gold prices may stay at high levels in the coming months as investors seek a safe store of value amid slowing global economic recovery, a weaker dollar and geopolitical uncertainties, China National Gold Group Corp. General Manager Sun Zhaoxue said Thursday.
"The future of gold looks very promising," especially in view of rising investment and physical demand in China, said Sun, who is also president of China Gold Association.
China's annual gold demand will likely exceed 700 metric tons in the next several years, while annual output may reach 400 tons in the next three years, Sun said.
Chinese demand rose 21% to 571.5 tons last year, with gold jewelry demand totaling CNY270 billion in value, he said.
A Chinese person now owns about 4 grams on average, from a little over one gram a few years ago, but it is still well below the world average, he said, without elaborating.
"There is a gold investment rush among Chinese investors as they consider it a hedging tool."
Investment in gold bars increased 94% to 141.9 tons in 2010, while investment in gold coins was up 55% at 16.6 tons.
China's investment demand in the first three months of the year more than doubled to 90.9 tons, outpacing India's 85.6 tons, the World Gold Council said in a quarterly report.
China's gold reserves account for about 6% of total global reserves and its proven gold reserves reached 6,327 tons in 2009.
China's gold mineral reserves account for about 6% of the world's total, but the quality is lower than those found in South Africa, Russia and Australia.
We draw your attention to the increased investment demand for both bars and coins, if this rate of demand continues to increase at these rates then there just wont be enough gold to go around, so hang on to yours eh!
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