Gold News

China's Move to Buy Gold Led by "Crass Frenzy" of "Frantic Middle-Aged Women" Say Outside Media

BUY GOLD bids eased back only to rise again in London trade Wednesday morning, recovering yesterday's 3-month high in the wholesale spot price above $1290 per ounce.
 
Silver investment bar prices again followed but lagged gold's 1.8% gain for the week so far, adding 1.4% with a brief spike to 3-week highs at $20.33.
 
Asian stock markets rose but European equities were subdued after new data showed China's trade surplus growing 14% last month from Jan. 2013.
 
"Chinese damas continue to buy and sell gold on whim," says the Taiwan-based WantChinaTimes, reporting what it calls " frantic gold purchases" over the New Year holidays and citing a nickname it says was given by Western journalists to middle-aged women shoppers driving much of 2013's record China gold savings demand.
 
Many people choosing to buy gold in China "are in their 50s and 60s," The Times here in London agrees today. "They are desperate to invest, live with a vague fear of catastrophe and cannot believe that gold prices fell so sharply last year."
 
Reporting a social-media attack on "crass rich" brides in Fujian province "which went viral" with photographs of gaudy necklaces, tiaras and bracelets, the paper adds that "For middle-aged buyers, many of whom lived through decades of poverty and the randomised madness of the Cultural Revolution, the gold frenzy is about buying at low prices and having something they dreamt of owning for years."
 
Amongst large institutional investors in the West, in contrast, "It's going to need a big reversal of sentiment towards gold" to keep moving prices higher reckons Credit Suisse analyst Tom Kendall.
 
"When we talk to some of the real money [wealth management] and private bank crowd," he told CNBC Tuesday, "it's clear there's still a lot of stale length out there that's looking for a bounce to sell into."
 
"Any attempt at the $1300 psychological mark is likely to meet resistance," agrees a note from Credit Suisse's fellow Swiss investment and London bullion bank UBS.
 
But for those looking to buy gold, "the orderly grind higher makes it a bit easier...to regain some level of conviction."
 
Following new US Fed chair Janet Yellen's appearance before lawmakers in Washington yesterday, Bank of England governor Mark Carney today back-peddled on his previous "forward guidance" of looking to raise interest rates when unemployment fell to 7%.
 
Saying the target "helped reinforce" the upturn in UK economic data, by assuring people that rates would not rise from the all-time low of 0.5% first set five years ago, "We've [since] learned that as yet the recovery is neither balanced nor sustainable," Carney said when presenting the latest Inflation Report, hinting that market expectations of a rate hike in spring 2015 are now "in line" with the Bank's current thinking.
 
The Pound jumped on Carney's comments, regaining the last of February's 3-cent drop to the Dollar, helping cap prices to buy gold in Sterling some 1.1% below Tuesday's new 11-week high of £785 per ounce.

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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