Does China Still Love Gold?

  on February 05 2013 1:39 PM

The recent price action in gold and silver has been frustrating for some people. Both precious metals logged gains last year, but continue to remain in consolidation mode. On the positive though, bullion demand is still providing support to prices.

Due to the vulnerabilities of the global financial system and numerous quantitative easing programs, several nations are increasing their gold holdings. According to Bloomberg and data from the Census and Statistics Department of the Hong Kong government, gold imports into mainland China from Hong Kong nearly doubled to an all-time high last year. China, the world’s second-largest economy and the biggest gold consumer, imported a record 834,502 kilograms (834.5 metric tons), including scrap and coins, in 2012. In comparison, the nation only imported 431,215 (431.2 metric tons) kilograms the previous year.

Chinese imports in December increased to a fresh monthly record of 114,405 kilograms, compared to 90,764 kilograms in November and 38,650 kilograms in the same period a year earlier. It should also be noted that the imports only represent private demand and does not account for official sector Chinese purchases.

Central banks are still interested in gold.

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