Chinese gold imports top 200 tonnes so far in 2011 ahead of India
Posted on 21 May 2011 with 7 comments from readers
China became the largest market in the world for gold bullion and coins in the first quarter of 2011, ahead of India, with the Chinese buying more than 200 tonnes of gold in the first four months, almost the same as the 240 tonnes bought in the whole of 2010, itself four times up on 2009.
This data was released by the World Gold Council last week. April was a particularly busy month for gold purchases by China as they topped the entire first quarter’s 93.5 tonnes. But that said the first quarter purchases were up 55 per cent from the previous quarter and more than double the level of Q1 a year ago.
Price support
The huge surge in demand for physical gold from China is clearly the main factor underpinning rising prices. Eastern demand is replacing any selling of gold in the West, for example by George Soros who appears to be switching to gold equities instead (click here).
If the trend established in the first quarter continues then China will replace India as the largest overall consumer of gold. The move comes after a deregulation of the Chinese gold market to encourage the holding of gold, and also something similar for silver, which has resulted in a surge in specialist shops and banks importing precious metals.
Why are the Chinese authorities doing this? It is quite painfully obvious. This is a hedge against a weakening US dollar and inflation. Gold is the real money, not the paper that China is forced to buy to support its export sector.
Price going up!
China not only knows this but is actually doing something about it. The implications for the gold price are also obvious.
Meanwhile, Bloomberg reports today that the Shanghai Gold Exchange is to start exchange traded funds for precious metals which are not currently available in China. Think what gold and silver ETFs have meant for prices over recent years in the West, and think what that might mean in the East!
7 Comments posted by readers:
So, gold doesn’t just reflect the value of fiat currencies especially the dollar. There is a supply-demand pushing prices above the value of a currency.
The Chinese are gradually (so as not to collapse it) dumping US debt and moving SOME of their excess wealth into gold. They are also buying a lot of farmland in Africa and other Asian countries, hoping to have something to eat after the Northern China aquifers dry up. Only about 15% of China is farmland. That is difficult to believe, but if you look at Google Earth, you can see that much of the Eastern half of China is steep mountains. The Western half is desert, and the Tibetan plateau. It is dry AND COLD up there a lot of the year. The new train line that they recently opened has oxygen masks for non-natives to use if they get light headed or nauseous.
I can still remember a trip back in the early 1970’s that I took with my parents on a vacation to beautiful Rocky Mountain National Park near Denver, Colorado. (I’m glad I saw it before the Washington balanced budget hawks sell it to China.) We drove to the top of Pikes Peak, which is 14,100 feet (4.3 km.) high. There is a gift shop and snack bar at the summit. Having been addicted to chocolate my entire life, I ordered a cup of hot chocolate. In the few minutes it took to arrive, I got so nauseated from the altitude, that I couldn’t take one sip. It was weird because I had hiked some trails in the Park at lower altitudes to see some lakes with no problems, but they were nowhere near 14,000 feet in elevation. I found out way up there why jets drop down to 10,000 feet when they lose pressurization.
Now I need to go check and find out how many hours we have left. I wonder if the world has already ended in New Zealand?
US numerairologists will have a day in the sun at last!
Gold go Up ! $5,000.
Yes You Can!
Price of a kilo bar of silver in Dubai’s Gold Souk: AED 4282.
What’s hilarious is that the Chinese bought no gold when it was cheap but now they’re buying it when it’s far costlier. Yet everybody says the Chinese are brilliant.
To Horace Manoor:
(“What’s hilarious is that the Chinese bought no gold when it was cheap but now they’re buying it when it’s far costlier. Yet everybody says the Chinese are brilliant”)
FYI, the Chinese are buying gold now BECAUSE it is expensive…they have so many US dollars that to buy significant quantities of PM in the recent past would have been catastrophic for the markets. They don’t care what it costs in dollars as long as they get rid of as many $$ as possible in exchange for something of real value. They are VERY brilliant!