Gold Forecaster
- Global Watch
Gold - Chinese rising demand
affecting the gold price much more
Julian D.W.
Phillips
Gold Forecaster snippet
Mar 30, 2007
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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.
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Mar 21, 2007
-Julian
D.W. Phillips
email: gold-authenticmoney@iafrica.com
321gold Ltd
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