China became the world’s biggest consumer of gold in 2013, helping worldwide demand for small bullion bars and coins reach the highest levels ever recorded for the year.
The World Gold Council (WGC) described interest in gold bullion as a “phenomenon”, highlighting a notable shift from West to East in consumption for the precious metal.
In China, gold bullion bar and coin demand rose 38 per cent last year, while jewellery saw a 29 per cent increase in sales.
India, always a strong performer in international gold markets, saw consumer demand climb 16 per cent for bullion bars and coins and 11 per cent for jewellery . However, the country struggled to overcome high import duties of 10 per cent on imported gold throughout 2013.
For the first time, the consumer demand rose to approximately 1,120 tonnes in China, in comparison to a consumer demand in India of only 978 tonnes.
China to continue activity in gold markets
According to the WGC, China’s continually increasing investment in gold is unlikely to change anytime soon.
The organisation predicted that while 2014 is likely to be a year of consolidation for the country, demand will rise over the next four years.
Albert Cheng, managing director of the WGC’s Far East department, said China is now at the centre of the global gold ecosystem.
“Since liberalisation of the gold market began in the late 1990s and the subsequent offering of gold bullion products by local commercial banks from 2004, we have witnessed astonishing increases in demand for gold from consumers across the country,” he explained.
“The cultural affinity for gold runs deep in China and when this is combined with an increasingly affluent population and a supportive government, there is significant room for the market to grow even further.”
Gold market trends in China
· China is now the world’s largest source of mined gold;
· Official gold data suggests China is sixth biggest holder of gold bullion, but experts speculate the country has been expanding its stockpiles;
· China has the world’s largest jewellery market;
· China’s middle class is estimated grow to 500 million people by 2020, with investment opportunities predicted to climb significantly;
· Investment in small gold bars and coins could rise to 500 tonnes by 2017, a 25 per cent increase on 2013′s record figures.
Investing in gold
China is just one country that is attempting to protect its investment and banking systems through purchasing physical gold. In fact, it is a strategy being employed by a number of nations in Asia as the US economy struggles.
Australia’s proximity to China has meant the country has received significant foreign investment into gold mining projects over recent years. While iron ore and other resources-based initiatives have slumped, gold production is only getting stronger.
With the Australian economy also tightening in recent months, precious metals are likely to become a popular choice among investors looking to stabilise their portfolios.
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