Chinese year of gold
Recent information from China's Ministry of Commerce recently showed that the sales of gold, silver and jewelry at Caibai, a major Beijing gold retailer, rose a massive 57.6% Also the state news agency Xinhua reported that both Caibai and Guohua, another top gold retailer, reached about 600 million yuan (US $95.28 million) in total sales. Beijing's Municipal Commission of Commerce said the week-long holiday produced a 49.7% jump in sales over last year's festival.
All across China sales are booming with customers crowding into jewelers to buy up all the New Year's gold bars, gold ingots and other kinds of dragon-themed jewelry they can lay their hands on.
Over the past few months the Chinese government has been encouraging its citizen to buy gold and hold as much gold as they can. Many analysts believe this is part of a strategy to build up the assets in the face of a weakening US dollar and European euro.
Assistant Manager Guan Qiang at Caibai told Xinhua News, "To most Chinese nowadays, gold is more convenient to cash in than other investment instruments. Despite common investment risks, the price of gold is clear and easy to judge."
And Liu Yangyi, a Shanghai Gold Exchange Trader, told the Global Times, "Many Chinese people lost lots of money in property and stock investments in 2011, so they prefer to buy gold to maintain the value of their savings amid high inflation."
"Chinese do not value gold only in sentimental terms. The precious metal is also expected to maintain or increase its value, as evidenced by the surging investment demand seen around the country," said another.
The Shanghai Gold & Jewelry Trade Association is expecting gold investment to hit 955.2 tonnes by 2020 according to Xinhua.
"Besides, Chinese people have a special feeling toward the dragon, and sales of gold jewelry in the Year of the Dragon are much better than in other years," Liu said.
One Beijing citizen, Miao Miao commented, "You can hardly even see the gold bars, necklaces and pendants in the display case. People seem crazy about gold, snatching it up more like a 'cheap cabbage' than such a precious metal," said Beijing resident Miao Miao.
"You have to quickly decide whether to make a purchase, or it will be taken away by others."
Miao, shopping for a pair of gold bracelets for her granddaughter continued, "When my daughter was born in 1984, we had no means or savings to buy her one as a keepsake. We can finally realize this dream by sending it to her daughter," Miao said.
However, Chinese buy gold not just for beauty and sentimentality. There is a expectation of increased future value of investing in gold. This is evidenced by the continual rise in demand. only in only sentimental terms. The precious metal is also expected to maintain or increase its value, as evidenced by the surging investment demand seen around the country, insiders have said.
"To most Chinese, gold is more convenient to cash in than other investment instruments. Despite common investment risks, the price of gold is clear and easy to judge," said another resident.
Strong demand for investments in gold and jewelry has driven China’s total gold demand to 750 metric tons in 2011, according to the World Gold Council and she is expected to surpass India as the top gold consumer in the next couple of years or so.
"Despite the record-high price of gold, the demand for investments in gold and jewelry has continued to soar, with the market expected to reach about 955.2 metric tons by 2020, thanks to a growing middle class and a more affluent society." said Binghai, director of the Shanghai Gold & Jewelry Trade Association.
The Chinese Year of Gold is upon us and now is the time to buy gold it seems.