China to Overtake India as World's Biggest Gold Consuming Nation
Much like how China has surpassed the US in so many manufacturing and economic milestones — and South Africa in gold production — the world’s most populous country is now poised to topple India as nation with the strongest gold demand in the world.
China has long been interested in amassing gold reserves, and often from its own gold mines rather than the International Monetary Fund’s bullion (for example).
Similarly, its government has encouraged the Chinese citizenry to load up on the yellow metal as way of bolstering household savings. The Asian behemoth also sped up the gold purchasing process by allowing ordinary retail clients to easily change cash into gold at local branches of the Bank of China. Given these realities, it’s hardly surprising China has risen up through the gold consumption ranks so rapidly.
According to Bloomberg:
“‘Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India,’ [Chuck Jeannes, chief executive officer of Goldcorp Inc.] said yesterday in a telephone interview from New York. ‘Now it looks like that could happen as early as the end of this year. And that’s while Indian demand is increasing.’
“While global demand for gold is advancing on concerns about financial turmoil in the U.S. and some European countries, consumers in China are buying larger amounts of the metal as an inflation hedge, Jeannes said.
“Investment demand in China more than doubled in the first quarter to 90.9 metric tons as the nation overtook India to become the largest market for coins and bars, the World Gold Council said in May. India was the largest consumer of gold jewelry last year, according to data compiled by Bloomberg.
“Gold reached a record $1,631.20 an ounce on July 27 in New York on concern about a potential U.S. default and is heading for an 11th straight annual increase.”
Although Jeannes originally anticipated gold at $1,600 in 2011, he’s now expecting its price to rise to $1,700 an ounce this year. Neither India, nor now China, are witnessing gold’s present dearness slow demand. You can read more details in Bloomberg’s coverage of how China’s gold demand may surpass India this year.