China is the world’s largest producer of gold, but all of its supply has been bought internally. Now, however, Chinese demand is on the rise beyond what is mined inside the country. Gold imports have increased to 209 tonnes through October, up from 45 tonnes last year. Total Chinese demand is up to 450 tonnes per year. Some are saying this demand could top 600 tonnes and match the gold demand from India. Chinese demand is up nearly 75 percent from last year. This demand both from private and official sources is a strong driver of global demand.
Chinese inflation expectations are rising and overall income has increased demand for luxury goods. Both have generated strong gold new demand just when gold jewelry demand in the developed world has decreased.This seems fairly logical given the inflation differential between Asia and the developed world. The US and other developed countries have been worried about deflation while the inflation in China and India is real.
Investment demand for gold is at 40% and has now exceeded jewelry demand for the first time since data recorded in the modern gold era. Consumption demand has fallen by well over a third while investment has more than doubled in the last five years. The demand for gold as inflation expectations is clear.
Interestingly, counterfeiters of gold are on the rise as expected when there is a dazzling increase in price.This is a sign of a bubble economy when fraud increases.
No comments:
Post a Comment