Save your cookie preferences

We use cookies to remember your site preferences, record your referrer and improve the performance of our site. For more information, see our cookie policy.

Please select an option below and 'Save' your preferences.

Save

You can update your cookie preferences at any time from the 'Cookies' link in the footer.

We use cookies (including third-party cookies such as Google) to remember your site preferences and to help us understand how visitors use our sites so we can improve them. To learn more, please see our privacy policy and our cookie policy.

To agree to our use of cookies, click 'Accept' or choose 'Options' to set your preferences by cookie type.

Options Accept

  • English
  • Deutsch
  • Español
  • Français
  • Italiano
  • Polski
  • 日本語
  • 简体中文
  • 繁體中文
  • Daily audit
  • Help
  • Contact
  • Deposit
  • Login
  • Open account
  • ABOUT US
    • About BullionVault
    • In the press
    • Reviews
    BUY/SELL BULLION
    • Live order board
    • Daily Price
    • Regular Investing
    INVESTMENT GUIDE
    • Guide to gold
    • -How to buy gold
    • -Gold investment
    • -Gold investment plan
    • -Investment insurance
    • -Compare asset performance
    • Guide to silver
    • -How to buy silver
    • Guide to platinum
    • -How to buy platinum
    GOLD NEWS
    • Gold news front page
    • -Gold price news
    • -Opinion & analysis
    • -Market fundamentals
    • -Gold/Silver Investor Index
    • -Infographics
    CHARTS
    • Gold price
    • Silver price
    • Platinum price
    • Price alerts
  • Login
  • Open account
  • BUY/SELL BULLION
  • Live order board
  • Daily Price
  • Regular Investing
  • INVESTMENT GUIDE
  • Guide to gold
    • ⤷
    • How to buy gold
    • Gold investment
    • Gold investment plan
    • Investment insurance
    • Compare asset performance
  • Guide to silver
    • ⤷
    • How to buy silver
  • Guide to platinum
    • ⤷
    • How to buy platinum
  • GOLD NEWS
  • Gold news front page
    • ⤷
    • Gold price news
    • Opinion & analysis
    • Market fundamentals
    • Gold/Silver Investor Index
    • Infographics
  • CHARTS
  • Gold price
  • Silver price
  • Platinum price
  • Price alerts
  • ABOUT US
  • About BullionVault
  • In the press
  • Reviews
  • Help
  • Contact
  • Daily audit
    • English
    • Deutsch
    • Español
    • Français
    • Italiano
    • Polski
    • 日本語
    • 简体中文
    • 繁體中文

Gold News

Live support

NEED HELP? ASK US NOW

Search form

Gold News front page

Gold Price News

Gold Prices Slip as Western Funds 'Chase It Higher', Indian Jewelry Stores 'Pin-Drop Quiet'

More...

Gold Investing In Depth

Learn about gold bullion bars

Learn about gold bullion coins (and costs)

Gold investment: Why & how?

Gold Investment Analysis

  • Latest Gold Investor Index
  • Diversification: Gold as investment insurance
  • 40-year Asset Performance Comparison Table

Gold Articles

Opinion & Analysis

Gold Price News

Investment News

Gold in History

Gold Books

Gold Investor Index

Gold Infographics

Archive

  • February 2019 (27)
  • January 2019 (33)
  • December 2018 (28)
  • November 2018 (39)
  • October 2018 (38)
More...

List of authors

China's Gold Investment Demand Rising

Wednesday, 12/08/2010 17:32

Strong growth showing in China's Gold Investment demand...

NEWS BROKE last week that China's gold imports for the first 10 months of the year had risen to almost five times 2009's total levels, writes Julian Murdoch at Hard Assets Investor.

China doesn't usually comment on its imports and Gold Bullion reserves, so any news is useful – and numbers like these are downright surprising.

The head of the Shanghai Gold Exchange, Shen Xiangrong, told a conference in Shanghai that China had imported 209.7 tonnes of gold during the first 10 months of the year. To put that in perspective, the World Gold Council estimated total Chinese imports for 2009 at a mere 45 metric tonnes.

As a comparison, the SPDR Gold Trust, the world's largest physically backed gold ETF, had inflows of 159.5 tons over the same 10-month period.

Don't be fooled: China's imports aren't up because its domestic production is low. In fact, over the past few years, China has emerged as the world's top gold-producing country, mining 314 tonnes of gold in 2009, according to the World Gold Council. Production for 2010 is expected to remain high; Walter de Wet, head of commodities research at Standard Bank, told the Wall Street Journal that 2010 production is expected to be around 350 metric tonnes.

No, the important story is more about growing Chinese demand, and particularly how China's Gold Investment demand is growing.

China's portion of global gold demand has risen significantly since 2003. As the country's economy has grown, the Chinese began purchasing more gold, primarily in jewelry. In 2009, jewelry comprised almost 80% of Chinese gold demand; the next nearest sector was investment, at 18%.

But now Chinese Gold Investment demand is growing as well. Albert Cheng, the managing director of the World Gold Council's Far East department, told Bloomberg:

"The investment demand we estimate already reached 120 tonnes in the first three quarters, and it usually spikes in the fourth."

Market-development group the WGC estimates investment demand to hit 150 tonnes this year, compared with 2009's 105 tonnes. Ten 10 years ago, China's Gold Investment demand was in the single digits.

Gold Investing has never been easier for Chinese households, as the government has begun to relax its control over the gold market. Most investment demand takes the form of Gold Bars and coins, but last week, the Chinese Securities Commission gave approval for the creation of China's first gold mutual fund, too.

The Lion Global Gold Fund, as it's called, will be a fund-of-funds that will invest in physically backed gold Gold ETFs overseas. It is a new avenue for Chinese investors, and the first one that allows them access to the global gold market.

And then, of course, there are other, more leveraged means of accessing gold, like Gold Futures. Trading volume on the Shanghai Gold Exchange increased 43% over the first 10 months of 2010.

Still, all things considered, China's per-capita demand for gold is quite low, especially given the high cultural value associated with the metal. The World Gold Council puts Chinese per-capita consumption at just 0.26 grams, much lower than seen in countries such as India or Saudi Arabia, both of which have similar "gold cultures".

Since these imports have already happened and, therefore, already been factored into the price of gold, news of higher Chinese imports is, in some ways, just an interesting hindsight. As Jeff Christian, managing director at CPM Group, told the Wall Street Journal:

"Everybody in the gold market knew there was a surge in investment demand, but they didn't know it was China."

But as more Chinese investors demand gold, that could push prices higher in a more sustainable fashion.

After all, today's gold price still sits below the 1980 peak of $2300 per ounce when adjusted for inflation. Remember the simple equation: Higher Demand + Stagnant Supply = Higher Prices Ahead.

In fact, beyond owning physical Gold Bullion, the most interesting opportunities for investors may lie on the supply side of things. Because with China on a gold binge and domestic production, while higher (and the world's No.1 in fact) still not keeping up, Gold Mining producers outside of China may see benefits, even if gold's price remains stable. After all, the gold's got to come from somewhere.

While China is currently the No. 1 gold producer in the world, it is thought to have only 4% of total gold reserves, according to the USGS' mineral commodity summaries report from January. South Africa and Australia hold much higher reserves, at 12.7% and 12.3%, respectively. Even the United States, at 6.4%, has more gold in the ground than China.

So, given that China already can't meet its domestic gold demand, companies operating in areas with more reserves will likely to be the long-term winners. 

Gold Investing made simple, secure and cost-efficient at world No.1 online, BullionVault...

  • Reddit logo
  • Facebook logo
  • Twitter logo
  • Google logo
  • Yahoo logo
  • LinkedIn logo
  • Digg logo
  • StumbleUpon logo
  • Technorati logo
  • del.icio.us logo

Hardassetsinvestor.com is a research-oriented website devoted to sharing ideas about investing in the natural resources sector. Published by Van Eck Associates Corporation, the site offers an educational resource for both individual and institutional investors interested in learning more about commodity equities, commodity futures, and gold – the three major components of the hard assets marketplace.

See full archive of Hard Assests Investor.
 

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News, RSS links are shown there.

Follow Us

Facebook Youtube Twitter LinkedIn

 

Mobile apps

 - live trading 24/7

 - buy & sell instantly

 - up-to-the-second charts

 

 

 

Daily news email
Go to 'communications settings' 

Get the latest daily gold price news free by email

Latest gold news by email

 

 

 

Gold Investor Index
5 February 2019

Gold Investor Index

Gold up, investing up!

 

 

 

CNBC TV-18
3 January 2019

CNBC TV-18

Gold jumps into New Year

 

 

 

Portfolio Adviser
19 October 2018

Vaulted large bar gold. Source: BullionVault

Beyond gold 'chatter'

 

 

 

Money Observer
6 August 2018

Bitcoin ain't gold

No, Bitcoin isn't "new" gold

 

 

 

  •  Email us

Market Fundamentals

  • Gold 'Set to Drive' Silver Price Gains in 2019
  • LBMA Gold Price Forecasts See Tight Range in 2019
  • Gold Mining M&A Now 'Easier' Than New Exploration
More...
  • Cost calculator
  • Cookies
  • Terms & conditions

©BullionVault Ltd 2005-

  • Twitter
  • Facebook
  • Google Plus
  • LinkedIn
  • YouTube