China’s Gold Investment to Top Record: Cheng

Gold investment in China is likely to top a record 200 metric tons this year. The investment demand surged 70 percent during 2010 which was an all time high at 187. With global uncertainty increasing, the World Gold Council believes China will top the 200 metric tons for 2011.

By Joe Richter
Sep 18, 2011 5:16 PM MT
Bloomberg

Gold investment demand in China is likely to top a record 200 metric tons this year, the World Gold Council said.

The country’s investment demand surged 70 percent in 2010 to an all-time high of 187 tons, said Albert Cheng, the Far East managing director at the World Gold Council.

China’s “investment demand has picked up exponentially,” Cheng said yesterday in an interview in Montreal. “The financial crisis has triggered people to be cautious of anything they don’t understand,” boosting demand for bullion as an alternative asset.

Gold futures have surged 29 percent this year, touching a record $1,923.70 an ounce on Sept. 6. The metal climbed as escalating debt woes in Europe and the U.S. boosted demand for haven assets. India is the world’s top bullion buyer followed by China. The two countries accounted for 54 percent of world gold consumption in the second quarter, Cheng said.

The council has estimated demand from China may double in 10 years. The forecast may be “too conservative,” Cheng said.

“Investment demand has been a key driver and will remain a key driver, because there’s not many investment options” in China, Cheng said. “The price of gold has surged, and we haven’t seen demand weaken. Chinese people say, ‘If I don’t buy gold today, it will be more expensive tomorrow.’”

China’s gold consumption totaled 706 tons last year, including 452 tons for jewelry, Cheng said. Jewelry demand may climb 9 percent to 10 percent annually in the next five years, he said.

To contact the reporter on this story: Joe Richter in Montreal at jrichter1@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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