What Chinese investors really think about gold

From Jeff Clark, Senior Precious Metals Analyst, Casey Research:

Have you ever wondered what the typical Chinese gold investor thinks about our Western ideas of gold? We read month after month about demand hitting record after record in their country – how do they view our buying habits?

Since 2007, China’s demand for gold has risen 27% per year. Its share of global demand doubled in the same timeframe, from 10% to 21%. And this occurred while prices were rising.

Americans are buying precious metals, no doubt. You’ll see in a news item below that gold and silver ETF holdings just hit record levels. The U.S. Mint believes that 2012 volumes will surpass those of 2011.

But let’s put the differences into perspective. This chart shows how much gold various countries are buying relative to their respective GDPs.

It’s widely believed that the majority of the gold flowing into Hong Kong ends up in China, so its total is probably close to double what the chart reflects. Even if none of it went to China, coin and jewelry demand is 35 times greater than the U.S., based on GDP.

The contrast between how our two nations can buy bullion is striking…

Article Continues Below
•   In China, you can buy gold and silver at the bank. My teller looked at me oddly when I asked.
•   Bullion is available for purchase at Chinese post offices. I wonder how my local postman would respond if I asked for a tube of silver Eagles.
•   Mints are readily accessible to retail customers. Here, I can only order proof and commemorative products from the U.S. Mint and am forced to go to an independent dealer.
•   A new product design is…

Read full article…


Follow IWB on Facebook and Twitter