chinese appetite for gold

  1. 9,081 Posts.
    This extract from the Gold Eagle website is worth a close look. It augurs well for the POG (long term):

    "Do the Chinese have an appetite for Gold ?

    Well, last year when the first trial took place regarding Gold bar sales, it just took two hours to sell the 15 kg of Gold bars leaving many with empty hands.

    Customers Queue for Gold Bullion

    Customers lined up to buy investment-grade gold bullion yesterday, when it went on sale for the first time in Shanghai since 1949 -- making a mockery of retailers that refused to sell gold bars earlier this week, claiming there was no demand for it due to high world prices.

    Responding to numerous phone calls from eager buyers, Shanghai Lao Feng Xiang Co. Ltd., the city's leading gold jewelry processor and retailer, decided to sell 15 kilograms of bullion on a trial basis. It's safe to say the trial was a success as almost all the gold bars were sold within two hours yesterday afternoon.

    Also the appetite for Gold mining shares is tremendous.

    Two Chinese Gold Mining companies who went public lately (August 2003) experienced a tremendous investor demand for their shares. Both received much more orders than the amount of stock available ! Zhongjin received 824 times more orders than stock available and Shandong Gold received 2171 times more orders than stock available !

    "Gold mining companies like Shandong and Zhongjin are favored by investors as they are assured of stable earnings as gold will always be in demand," said Fang Binyin, a trader at Guotai Junan Securities. "

    So what to expect from the Chinese Gold Market coming years ?

    According to Newmont CEO Pierre Lassonde the Chinese Gold Market will be the biggest Gold Market in just a few years time !

    "Lassonde said the 1 June deregulation of the Chinese gold market was an epoch making event for the gold market. He said China had the potential to become the biggest consumer of gold over the next three years, overtaking India at around 600-700 tonnes a year. "We'll see the impact of that in a year or two … China will surpass India in a short time as the largest gold market in the world," he said."

    In an Interview with the Denver Post he said : (August 31, 2003)

    Then there's China, where after years of communist controls, the government is deregulating gold, allowing gold companies to have initial public stock offerings, creating a gold exchange and even allowing its citizens to buy gold at market rates.

    That's 1.3 billion people who now are permitted to buy gold at market rates as they participate in their fast-growing economy.

    "China by itself could become 40 percent of the entire gold market," Lassonde said. "That is the most important thing that's happened to the gold market in the last five years, and yet very few people have picked up on it."

    www.denverpost.com/Stories/0,1413,36~130~1600280,00.html

    Conclusion

    Chinese deregulation of the Gold Market will create an additional demand for Gold of 300-400 ton/year. "

 
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