Investors in China are snatching up gold coins and gold bars, and they are buying more gold now than they have ever done before in just the first quarter of 2011.
China has now overtaken Indian gold buyers as the world’s largest buyers of gold metal.
Within the first three months of 2011, China’s investment in demand for gold more than doubled, all the way to 90.9 metric tons, which beats out India’s rise to 85.6 tons, according to the World Gold Council. India makes up 23 % of gold investment demand, while China now makes up 25% of gold investment demand, according to YahooNews.
This report underlines the hunger for gold that is growing amongst the middle-class in China. One of the main reasons why investors are being lured to gold is fear of China’s soaring inflation, and marketing of gold metals have increased over the last few months.
Eily Ong, an investment research manager at the gold council, says that many people will probably be shocked by the strength in the demand of gold by the Chinese, and that the trend is most likely going to continue.
According to Bloomberg, investment demand has grown about 14 percent every single year since the market became deregulated in 2011. This momentum is expected to continue.
The demand for jewelry has more than doubled in the past seven years from 224.1 tons in 2004 to 451.8 tons in 2010. In the first quarter, China and India contributed 63 percent of gold jewelry demand in the entire world.
According to Xinhuanet, in 2009 China posted cumulative gold demand that totaled to over 14 billion U.S. dollars, which made up around 11 percent of the world’s total.
The World Gold Council says that the global gold supply decreased by 4 percent year-on-year, and this was due to a an increase in net buying by central banks and a decline in the supply of gold that was recycled, which fell 6 percent from the previous year to 347.5 tons.