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Chinese rush to gold as inflation fears bite
Posted By admin On December 16, 2010 @ 4:34 am In Money Watch | Comments Disabled
Dec 16, 2010
While recent statistics show that China’s gold imports have risen dramatically this year, despite China itself being the world’s largest gold producer with mine production still rising to, anecdotal evidence suggests that this may just be the tip of the iceberg as Chinese people are, apparently, rushing to buy gold as an inflation hedge.
A report in the Financial Times suggests that gold purchasing by individuals is turning into such a rush – and the rising price, if anything, is – contrary to Indian experience – fuelling the intensity of gold demand there. With the ever-rising growth in the numbers of middle-income Chinese as the country’s wealth drips down to the people, this source of gold demand is becoming increasingly relevant to the global market. China is expected to surpass India as the world’s leading gold purchaser within the next few years and with the kind of surge in popularity of gold bars and coins, rather than jewellery, there this could even take place sooner rather than later.
As an indicator of the kind of demand being seen in China, FT Reporter Leslie Hook notes in a despatch from the Chinese capital: “At Beijing’s largest gold shop, the queues to buy bullion mini bars have turned into scrums as customers jostle for one of the country’s hottest commodities. The phone behind the bullion counter rings off the hook as a frantic sales clerk tries to answer buyers’ questions. The electronic chart displayed behind him says it all: the price of gold is rising and Chinese investors, worried about inflation, want in on the trend.”
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