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Chinese Demand to Buy Gold "Will Outstrip Supply"

DEMAND TO Buy Gold in China will outstrip Gold Mining supply over the next three years, according to the head of the county's largest state-owned gold miner.

Sun Zhaoxue, president of China National Gold Group, says there is "a gold investment rush among Chinese investors" who Buy Gold "as they consider it a hedging tool [against inflation]".

Sun predicts that while Chinese gold production could reach 400 tonnes by 2014 – a 19% rise on 2010 – demand to Buy Gold is set to grow 25%, to 700 tonnes.

Last year China mined an estimated 345 tonnes of gold, according to data from the US Geological Survey, which puts China's known reserves of gold at 1900 tonnes. 

"Gold demand has already outpaced Chinese production growth since 1992, even before the deregulation of private ownership a decade later," Eily Ong, investment research manager at the World Gold Council (WGC), said last year.

"Our analysis shows that if gold demand were to continue to increase so markedly, domestic supply would be unable to keep pace."

WGC data show that Chinese demand to Buy Gold rose 47% year-on-year to the first quarter of 2011. Gold Bar and coin investment saw the major jump, rising 123% to 91 tonnes.

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