More about the Chinese news of their deregulation of their gold industry. This was in the Agora Financial 5 Minute Forecast today from someone at Agora who watches that country (and gold supply and demand!) very closely - Dan Denning of The Daily Reckoning - Australia:
Chinese investors bought 73 tons of gold last year, Dan Denning notes, citing data from the Financial Times. That was up from 18 the year before. That's a 315% increase in demand from retail Chinese investors. Maybe this is the domestic demand being unleashed that everyone's been waiting for!
More seriously, the gradual liberalization of capital rules in China has unpredictable consequences. China is the world's largest producer of gold and the second largest consumer, behind India. But keep in mind that as recently as 2008, China's savings rate-to-GDP ratio was nearly 52%, according to People's Bank Monetary Policy Committee Member Fan Gang.
It is believed/hoped for that this ‘glut' of Chinese savings is both responsible for economic imbalances in the world and also the future salvation of global growth. But would it surprise you if middle-class investors in China choose to store some of their wealth in bullion, instead of plasma televisions?
That is, they might, if given the choice, turn paper into bullion, instead of turning paper into plasma. It just depends on the cultural attitude toward risk, toward affluence and, of course, toward gold.
I'm making my bet they choose gold coins over plasma! Place your bets here at Lear Capital !