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Chinese Buy Up Gold

Written by Gary North on February 2, 2012

China is importing a lot of gold. Yet China is a gold-producing nation. This indicates a large demand.

Imports in November rose by over 102 kilograms. This was up from 86,000 in October. They bought it from Hong Kong. Hong Kong reported this. China doesn’t.

China bought as much as 490 tons in 2011. It bought 245 tons in 2010. The trend is up.

Who is buying? We can’t be sure. Probably the central bank. But it’s more likely to be citizens. Gold as an asset has a long tradition in China. It survived. Communist economics didn’t.

Industrial users buy gold. But domestic production meets this demand.

It is likely that Chinese citizens are using gold as an inflation hedge. They can buy it easily in cities. It is easier to buy gold in China than to send yuan out of the country.

Chinese asset values have not yet crashed across the board, but the buying of gold—a leading indicator of panic—is an especially troubling sign that they will.  Therefore, it is not surprising that gold purchases by Chinese citizens and investors are frightening Beijing’s technocrats.  At the end of last month, they shut all of the countries gold exchanges other than two of them in Shanghai.

Gold is the safe haven investment in the West. India has bought it for millennia. Now the Chinese are getting in on the act.

There will be growing competition for gold ownership. China will be a net importer of gold from now on.

Most Americans own no gold, other than jewelry. By the time they catch on, competition will be fierce.

Continue Reading on www.forbes.com

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3 thoughts on “Chinese Buy Up Gold

  1. Gold may be pretty but you can't eat it or produce anything with it. Oil is a much more useful commodity.

  2. Kinda hard, though, to store oil in your home safe. However, gold can be used to buy oil.

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