WGC Releases China Gold Report – Demand to Far Exceed Supply
The World Gold Council’s China Gold Report entitled “Gold in the Year of the Tiger” suggests that gold consumption in China will continue to catch up with the rest of the world. For the most part, the WGC never writes anything bullish about gold, and this article is astoundingly bullish. China just became the world’s largest producer of gold last year, and already the report says it may be FULLY DEPLETED in just six years. China will need to spend HUGE money on gold (and silver) in the next decade, particularly given that not only are they the largest CONSUMER of gold as well, but also have the most to lose from devaluation of paper currency against real money. Below are excerpts from the report.
“The World Gold Council (WGC) believes that gold consumption in China will continue to catch up with the rest of the world following the deregulation of the Chinese gold market in 2001. Demand from China’s two largest sectors (jewellery and investment) reached a combined total of 423 tonnes in 2009 but domestic mine supply contributed only 314 tonnes during the same year. This Shortfall creates a “snowball” effect as China’s gold industry may not be able to keep pace with the annual leap in domestic consumption despite rising to be the world’s largest gold producer since 2007. Although the country’s appetite for gold has grown, making China the second largest consumer in the world, demand in China per capita has a lot of catching up to do to equal that of Western economies. In jewellery, the Chinese per capita consumption is one of the lowest at 0.26gm when compared to countries with similar gold cultures. If gold were consumed at the same rate per capita as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase by at least 100 tonnes to as much as 4,000 tonnes in this sector alone. Nearterm inflationary expectations and rising income levels are likely to support the investment case for gold as an asset class, especially given that Chinese consumers are high savers and are looking to gold to protect their wealth.”
This entry was posted on Wednesday, March 31st, 2010 at 8:11 am and is filed under China, Gold, Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
WGC Releases China Gold Report – Demand to Far Exceed Supply
The World Gold Council’s China Gold Report entitled “Gold in the Year of the Tiger” suggests that gold consumption in China will continue to catch up with the rest of the world. For the most part, the WGC never writes anything bullish about gold, and this article is astoundingly bullish. China just became the world’s largest producer of gold last year, and already the report says it may be FULLY DEPLETED in just six years. China will need to spend HUGE money on gold (and silver) in the next decade, particularly given that not only are they the largest CONSUMER of gold as well, but also have the most to lose from devaluation of paper currency against real money. Below are excerpts from the report.
“The World Gold Council (WGC) believes that gold consumption in China will continue to catch up with the rest of the world following the deregulation of the Chinese gold market in 2001. Demand from China’s two largest sectors (jewellery and investment) reached a combined total of 423 tonnes in 2009 but domestic mine supply contributed only 314 tonnes during the same year. This Shortfall creates a “snowball” effect as China’s gold industry may not be able to keep pace with the annual leap in domestic consumption despite rising to be the world’s largest gold producer since 2007. Although the country’s appetite for gold has grown, making China the second largest consumer in the world, demand in China per capita has a lot of catching up to do to equal that of Western economies. In jewellery, the Chinese per capita consumption is one of the lowest at 0.26gm when compared to countries with similar gold cultures. If gold were consumed at the same rate per capita as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase by at least 100 tonnes to as much as 4,000 tonnes in this sector alone. Nearterm inflationary expectations and rising income levels are likely to support the investment case for gold as an asset class, especially given that Chinese consumers are high savers and are looking to gold to protect their wealth.”
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This entry was posted on Wednesday, March 31st, 2010 at 8:11 am and is filed under China, Gold, Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.