Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19
Is There a Stock Market Breakout Ahead? - 6th Nov 19
These Indicators Aren’t Putting to an Economic Resurgence - 6th Nov 19
Understanding the Different Types of Travel Insurance - 6th Nov 19
The Biggest Gold Story Of 2020 - 6th Nov 19
Best Money Saving FREE Bonfire Night Fire Works Show Sheffield 2019 - 5th Nov 19
Is the Run on the US Dollar Due to Panic or Greed? - 5th Nov 19
Reasons Why Madrid Attracts Young Professionals - 5th Nov 19
Larger Bullish Move in USD/JPY May Just Be Getting Started - 5th Nov 19
Constructive Action in Gold & Silver Stocks - 5th Nov 19
The Boring Industry That Hands +500% Gains - 5th Nov 19
Stock Market Chartology vs Fundamentals - 4th Nov 19
The Fed’s Policy Is Like Swatting Flies with Nuclear Weapons - 4th Nov 19
Stock Market Warning: US Credit Delinquencies To Skyrocket In Q4 - 4th Nov 19
Stock Market Intermediate Topping Process Continues - 4th Nov 19
Stock Market $SPY Expanded Flat, Déjà Vu All Over Again - 4th Nov 19
How To Buy Gold For $3 An Ounce - 4th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Gold, Silver, Food, Chinese Hungry for Purchases of All Kinds

Commodities / Gold and Silver 2011 Mar 17, 2011 - 04:10 AM GMT

By: Dr_Jeff_Lewis

Commodities

Without having feet on the ground, it is nearly impossible to understand precisely what is happening in China.  The middle class is exploding, but jobs for skilled workers are few.  New cities are going up overnight, but the pictures show that no one is actually living there.  In many cities, hundreds of buildings are erected, left to be ghost towns for many months or even a few years before the buildings are again destroyed and new buildings are erected in its place.


Unlike much of the developed and developing world, China still has a government roadblock that impedes its progress.  In light of the rapidly changing relationship between the people and their leaders in the Middle East, some worry that the Chinese government may have to increase internal consumption in order to maintain employment.  However, there may be something that many are missing, especially silver buyers.

It is commonly reported that China exists as the fastest growing market for silver, having reversed its net export trend and then increased imports by multiples over a period of a few short years.  And now, having amassed wealth for years, it may just so happen that China is finally ready to consume. 

Perhaps these silver buys aren’t entirely investment, but also future jewelry and fine products intended for a consumption economy.  And even more realistically, a middle-class boom in China could lead way for two sources of metal demand: inflation and consumption.

What the Numbers Show

Recent data regarding Chinese imports and exports reflect a 19.4% increase in imports against export growth of only 2.4% annually.  At face value, the trend, should it continue, means China could be a sustained net importer by 2012, taking in more foreign goods than it exports around the world, and suggesting that China may finally be taking the step toward an internal, and international, consumption economy.

While the recent changes in Chinese consumption may be buoyed by celebration of the Chinese New Year, the fact of the matter is that slowing growth in Chinese exports and rapidly accelerating growth in imports may lend way for Chinese citizens to lead the recovery elsewhere around the world. 

China’s Hedge

Commodities will have to remain on the investment plate for most mainland Chinese, from the lowly factory workers to those who call the shots.  Given renewed pressures to allow the Renminbi to appreciate, Chinese investment overseas may continue to improve, but the question remains whether consumption will overtake investment in leading the Chinese rebound.

In order to accelerate its new push, the Chinese will rely on the commodities market more than they ever have, seeing the need to snap up massive amounts of metals to create new, “affordable” housing for the masses.  By 2015, the country hopes to build some 46 million homes and apartments to cool the real estate market, as well as provide for the massive leap the country is soon to undertake.  That may provide housing for as many as 100 million people, assuming a family size of less than three people.

Given this changing dynamic, investors should prepare for a temporary shift in Chinese metal demand.  Demand for silver may drop, at least in the interim, as the Renminbi strengthens and inflationary demand gives way to flashy demand. 

If one thing is certain, the future for China makes a perfect case for metal investment.  Make no mistake about it.  The Chinese consumer can lead a surface recovery and can certainly afford the gold and silver jewelry that may have been priced-out around the world.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules