Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19
Palladium, Darling of the PGEs, Shifting into High Gear - 13th April 19
MMT is a spectacularly Dem idea - 13th April 19
The 'Silver Lines' of Opportunity - 13th April 19
Gold Stocks Bull Market Breakout Potential - 13th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Forecast - Chinese rising demand affecting the gold price much more...

Commodities / Gold & Silver Mar 30, 2007 - 08:00 PM GMT

By: Julian_DW_Phillips

Commodities

The slow liberalization of the gold market is a fact of life albeit slow and not likely to see huge tonnages [like 3,000 tonnes] flow into the country quickly. But in this gold market it doesn't take huge tonnages to move the gold price.

We hear from China that 90,000 bank accounts are being opened every day. They need a bank account to qualify to buy gold [here is the control from the government and bankers over the rising gold market]. The Chinese public has indicated before that it would be happy to invest between 10 and 30% of their savings in gold, which they must now do through their bank and consequently the Central Bank. We are not even going to attempt to put a figure on what will go into gold in China, but we have to highlight one fairly dramatic likelihood:


The People's Bank of China [the Central Bank] is liberalizing to facilitate a professional gold market because local supply is being overtaken by demand. Even growing supply is not going to contain that controlled demand so gold will have to be imported in greater and greater quantities.

The demand to date from China has been coped with by local supply, so the global market has not seen that demand. The addition of Chinese production to the total as well as its demand is primarily academic and has not affected the gold price to date. However increasing Chinese demand for gold will draw off from external supplies, so will affect the global gold price .

In effect then demand over around 240 tonnes in China has to be satisfied by the market. So if the demand doubles [and for a country that size in the process of enriching itself, this would not stretch credibility whatsoever] the next 240 tonnes will likely come from London. This will draw off from a market taking the price up because demand is growing there.

Now we can get enthusiastic about gold demand from China even over relatively small quantities. So we report that in the South of China, in Guangzhou, retail sales of gold coins and gold products had reached 7.82 tonnes since February. That would equate to 94 tonnes per annum. But what about the rest of the country? In Beijing [northerly part of the country] a favorite piece of gold known as "lucky balls" is proving popular. These are one-gram balls, worn around the neck or wrist and are selling in their thousands.

The Chinese believe gold brings people good luck and is also a good investment and in China 'luck' is a religion.

China eases up on gold shipments and trading of gold

China will gradually relax restrictions on the shipment and trading of gold as the country deregulates the precious metals market, the central bank said. The nation wants to involve overseas investors, including banks, in gold trading, the People's Bank of China said in its annual report on the financial market, which was posted on its Web site today. The statement gave no timetable for the changes.

At present, only China's four biggest commercial banks, together with some smelters and jewelers, may import and export gold. The nation also bars overseas investors from trading on the Shanghai Gold Exchange, which offers cash and cash-deferred contracts for 150 domestic banks, miners, jewelers and traders.

"Relaxing trade rules will boost imports as domestic production cannot satisfy demand," said Wang Xinyou, a gold trader at the Agricultural Bank of China in Beijing.

China's authorities want to make the exchange one of the world's leading gold markets, offering derivatives such as futures and options in addition to the current physical transactions, the central bank said today in the report.

 

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2007 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.


© 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