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Mix-Ansicht- GOLD RUSH IN CHINA!!! - RK, 27.09.2003, 13:00
- Re: GOLD RUSH IN CHINA!!! - RK, 27.09.2003, 13:06
Re: GOLD RUSH IN CHINA!!!
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$36-bn private Chinese gold investment?
By: Tim Wood
Posted: 2003/09/26 Fri 17:00 EDT | © Mineweb 1997-2003
NEW YORK -- The Hong Kong edition of Friday’s China Daily will be celebrated in gold bug circles after the Bank of China’s bullion guru said local consumers could pour $36 billion into the metal, equivalent to around 2,950 tonnes, or more than one year of supply, at current prices.
Xi Jianhua, the Bank of China's gold business expert, is also quoted saying that it would be"safe and feasible" for China swap some foreign exchange reserves for gold. The country has a little over 600 tonnes of gold in reserve now, and $360 billion in foreign exchange.
Xi also wants rapid deregulation of the retail gold market, the cornerstone of which is the Shanghai Gold Exchange. China currently consumes about 200 tonnes of gold a year, much of it met from local production.
<font color=#FF0000>Apparently, a recent national survey show that one fifth of respondents claimed to be willing to divert 10 to 30 per cent of their savings to gold. Consequently, Xi believes that private funds amounting to 300 billion yuan could be buying gold, in addition to what the Chinese Central Bank would buy.</font>
The Central Bank purchase suggestion is especially bullish as uncertainty grows about the intentions of Washington Agreement banks regarding the renewal of their controlled gold sales.
Initial private demand in China is expected to be more modest at between 300-500 tonnes, but that would be a large fillip on top of expected demand for the World Gold Council’s globally traded gold funds. Gold producers that have recently conducted investor road shows in North America report that hedge funds are especially interested in the imminent ETFs.
Xi said the purpose of purchasing gold would be equivalent to the Fed’s market window, allowing China’s central bank to take yuan out of circulation, reduce the surplus on the current account and diversify foreign exchange holdings, all with an eye on reducing calls for the yuan to appreciate.
At a Denver Gold Forum luncheon devoted to gold investment issues, Pierre Lessoned, president of Newmont, said Chinese gold demand could only grow with deregulation. <font color=#FF0000>“Current consumption is 0.2 grams per person per year. In India it is over 0.7 grams and grew from a level similar to the Chinese 11 years ago. Indian gold market deregulation grew demand from 200 to 900 tonnes, although it has slipped to 600 tonnes now,” he said. “Imagine if China grows from 0.2 to 0.7 grams of gold per person? It will be the largest gold market in the world. It will happen, I can see it.”</font>
Andy Smith, Mitsui’s precious metals analyst, worries that Chinese gold demand will not live up to high expectations, and that investors are likely to make money selling more mundane items to a burgeoning middle class that aspires to the accoutrements of progress.
That said a Central Bank official talking openly about manipulating the yuan via gold is a significant milestone that bears watching. <font color=#FF0000>If China does swap a meaningful amount of dollars into gold in the next few months, investors can take Xi rather more seriously</font> than they might right now given the Bank’s cultivated inscrutability.
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