China Imports Five Times More Gold By Frank Holmes |
Dec 4, 2010, 2:01 PM
Just
last week we highlighted how India and China are driving
global gold demand (Read: India and China Continue to Drive
Global Gold Demand) but it appears demand from China is
even stronger than we thought.
Statistics released today by the Shanghai
Gold Exchange show that China’s gold imports have
jumped over 460 percent in just the first ten months of
this year. Through October, China’s gold imports totaled
209 tons of gold, up from just 45 tons in 2009.
And they’re not done yet. Historically,
the fourth quarter is when China imports the largest amount
of gold so we could see much higher figures when all is
said and done.
The import figures were released as a part
of a presentation from Shanghai Gold Exchange Chairman Shen
Xiangrong. Chinese inflation worries have picked up steam
as the year has progressed and Shen said “uncertainties
in domestic and global economies, and increasing anticipation
of inflation [in China], have made gold as a hedging tool
very popular” as investors look for a store of value,
according to several news reports.
Shen added that 70-80 percent of the imported
gold has been transformed into mini gold bars which the
Financial Times describes as a “classic product for
retail investors.”
While the figures are astounding, we’ve
been discussing this developing trend for several years.
Since 2000, the gross national income (GNI) per capita on
a purchasing power parity basis has jumped nearly 200 percent
in China.
Without a social safety net, efficient retirement
savings vehicles and a limited number of investment options,
these wealthier citizens are turning to the metal that they
began using as a currency more than 4,000 years ago.
We believe the figures released today reflect
long-term gold demand and are not short-term in nature.