Ten years ago Chinese investment gold demand – demand not related to jewelry, etc – was about 3 to 4 tons a year.
By 2009 it had grown to 45 tons.
Shen Xiagrong, chairman of the Shanghai Gold Exchange, recently revealed that China’s gold imports had rocketed almost fivefold so far this year, to 209 tons, which is about 8% of global investment demand.
On top of that, China is also a huge gold producer. The China Gold Association said China’s gold production increased 11.34% to a record 313.98 tonnes last year.
Why are the Chinese so interested in buying and producing gold?
Put simply, it’s because they are experiencing a higher level of inflation than in western countries, as a result of their fast-expanding, overheated economy.
They are taking steps to halt the rise in inflation, but at the same time taking out a little insurance.
Insurance? That means buying gold. In times of inflation, gold is the perfect home for your money. Not cash, but gold.
It is for the same reason that so many people are now buying gold in the west. We don’t yet have the same level of inflation as China, but there are signs that it could be coming soon.
So rather than wait until inflation hits, and the value of your money falls, it makes sense to protect your wealth by keeping a good proportion of it in the form of physical gold.
That means buying more gold coins and small gold bars, as and when you can.