The following is an excellent article from the December 2-December 8, 2013 issue of Bloomberg Businessweek from page 46 written by Bloomberg News titled “Commodities: China Is Ready To Pass India in the Gold Race” and I quote:
“China Poised to Surpass India in Gold Purchases”
By Bloomberg News November 27, 2013
Yang Cuiyan, a 41-year-old housekeeper from Anhui province, is one reason China is poised to topple India as the world’s top consumer of gold. Standing outside Beijing’s busiest jewelry store, wearing a thick coat against the autumn chill, she clasps a gold necklace that cost her 10,000 yuan ($1,640), or five months’ wages. “I can put it on when I go back home to show everyone that I’m doing well.”
Yang is one of the legions of middle-aged Chinese women, respectfully referred to as aunties, who bought coins and jewelry this year. Gold purchases in the world’s second-largest economy will surge 29 percent in 2013, to a record 1,000 metric tons, according to the median of 13 estimates from analysts, traders, and gold producers in China surveyed by Bloomberg News. China’s purchases of gold climbed 30 percent, to 996.3 tons, in the 12 months through September, while sales in India rose 24 percent, to 977.6 tons, according to the London-based World Gold Council. India was No. 1 in 2012. Each country buys more gold than the U.S., Europe, and the Middle East combined.
Gold’s burnished appeal in China stems in part from a lack of alternative investments. While the MSCI All-Country World Index of equities rose 18 percent this year through Nov. 22, the Shanghai Composite Index slumped 3.2 percent. Policymakers clamped down on property investments in March to cool the housing market, ordering the central bank to raise down-payment requirements for second mortgages in cities with excessive price gains. “In China, you look around and see very few places to put your money,” says Duan Shihua, a partner at Shanghai Leading Investment Management. “With the share market down and the government nudging people away from real estate, gold will remain a favored choice.”
Video: Gold Vault Opens in Shanghai Free-Trade Zone
The increased appetite for gold also reflects rising wealth. China’s rural per capita income in the first nine months of the year jumped 12.5 percent from a year earlier, while urban per capita disposable income rose 9.5 percent, data from the national bureau of statistics show. The nation ranks fourth worldwide for the number of people with $1 million or more in investable assets, with 643,000 in that bracket last year, up 14 percent, according to a report by consulting firm Capgemini and Royal Bank of Canada (RY). The U.S. ranks first, followed by Japan and Germany.
In April, when the price of gold fell 14 percent in two days, Chinese media showed images of aunties clearing shelves in gold shops. “I don’t know anything about the stock market, and I don’t have enough money to buy property, so I figured gold is the safest choice,” says Yang, who made the 650-mile journey to Beijing from her rural home to visit relatives and shop. “I want to keep up with my relatives and friends back home. We all like to compete to see whose necklace is thicker.”
Video: Gold-Laden Brides in India Defy Metal’s Slump
Story: India Tries to Curb Its Gold Appetite
The bottom line: China’s gold purchases rose 30 percent in the 12 months ended Sept. 30, to 996.3 tons, topping India’s 977.6 tons.”
(AS THE UNITED STATES GOES INTO MORE AND MORE TOXIC DERIVATIVES, WHICH THEY EVIDENTLY CONSIDER AN ASSET, THEY ARE GETTING AWAY FROM GOLD WHICH CHINA, INDIA AND GERMANY ARE ALL GOING INTO MORE GOLD. GOLD IS A COMMODITY AND IS A TANGIBLE ASSET. UNLESS THE UNITED STATES CAN FIGURE THIS OUT, WE’LL CONTINUE AS A NATION SLIDING TOWARD A BIGGER AND BIGGER DEBTOR NATION. THIS IS AN ISSUE, THAT WHOEVER RUNS FOR PRESIDENT OF THE UNITED STATES, WILL HAVE TO ADDRESS, EVEN THOUGH THE BIG BANKING LOBBYISTS THAT ARE RUNNING CONGRESS, LIKE THE FACT THAT WE HAVE AN UNREGULATED BANKING SYSTEM THAT CONSTANTLY BAILS OUT BIG INVESTMENT BANKS, RATHER THAN LETTING THEM FAIL ON THEIR OWN BECAUSE THEY WERE SO BADLY RUN. WHILE A BANKING SYSTEM IS CRUCIAL TO OUR SYSTEM AND WE MUST PROTECT THE BANKS THAT GET ROBBED BECAUSE OF BANK ROBBERS, US TAXPAYERS SHOULD NOT BE HAVING TO BAIL OUT BANKS THAT WERE ROBBED BECAUSE OF CORRUPT BOOKKEEPING AND HOLDING COMPANIES, WHICH WERE DONE DELIBERATELY TO CONFUSE THE RATINGS AGENCIES AND STOCKHOLDERS.
LaVern Isely, Overtaxed Independent Middle Class Taxpayers and Public Citizens and AARP Members