Everyone talks about the mysterious Chinese market demanding more and more gold.

November 23, 2011 – Everyone talks about the mysterious Chinese market demanding more and more gold but they don’t necessarily quantify exactly what’s happening in China that will affect gold coin prices here in the United States. Chinese demand for gold has grown 25 percent on the year, far outpacing the global average of 7 percent, and reflects how an economy that is considered to be relatively robust in the current economic climate regards gold as a means of getting ahead and staying ahead.

The slowdown in growth in China has been affecting the markets for some time. Most recently, a slowdown in manufacturing to 8 per cent is partially to account for the movement to the downside in the American and European stock markets. If the stocks are so sensitive to such a number, the burgeoning Chinese investment in gold will affect world gold markets and will affect gold coin prices in the United States in the months to come.

The Chinese government has been strongly encouraging its citizens to buy and to hold physical gold, and now silver, in various forms including jewelry. Depositors in the Bank of China have had the option to convert their savings to gold for years now. In recent months, silver has become an option for them as well.

Following the lead of central banks around the world, the Chinese gold imports also reached a record high in buying after the September correction that saw the price of gold reach as low as $1,534. As the price fell, Chinese investors were buying.

In fact, no one knows accurately what the Chinese holdings currently are. We do know, however, that China, as well as India, has a long history associated with gold. It is traditional in Chinese culture to own wealth in the form of gold. We do not share that tradition in the United States. This accounts for the buying of bars, coins, and jewelry. The buying of gold for jewelry this quarter in China has literally popped, the percentage being in the double digits.

As Chinese citizens continue to move into gold and Chinese demand for gold reflects traditional Chinese values, the world’s largest consumer of gold will contribute to a rise in prices here in the United States. This is not an overnight effect, but has certainly been occurring, and will continue to occur for some time. Gold coins, which are highly prized in China, may be the biggest beneficiary.

Kevin Johnson

Senior Staff Writer – GoldCoin.net