Wednesday, December 12, 2007

Chinese Billionaires to Buy up Gold

Buy gold is the cry from Chinese Billionaires! Many of Chinese wealthiest investors are selling off their shares and are about to invest almost 68 billion dollars into gold according to a top fund manager.

Wang Weilie, a fund manager who manages over $135 million dollars (1 billion yuan) on the Shanghai Gold Exchange on behalf of himself and his clients, has indicated that the so-called "Zhejiang clique" are about to pounce when Beijing opens up the spot market bullion trading and a futures contract launches early next year.

After accumulating 3 trillion yuan ($400 billion) from investments in red-hot real estate and stock markets, all of which have risen five-fold in the past two years, the wealthy group from eastern China is now looking for the next sure bet.

Wang says that's gold, and is expecting Chinese capital investment into gold over the coming two years to reach a record 500 billion yuan or$67.5 billion dollars US. This would launch China ahead of India as the worlds top buyer.

"We all agreed that upside room on stocks was limited, as was upside on property prices. But the gold price has only increased minimally, even after 20 years of China's reform and market opening," Wang told Reuters during a lunch with three business partners in Lujiazui, Shanghai's financial hub.

Coupled with inflation and global economic uncertainty, the redirection of Chinese capital towards domestic gold contracts will help spot prices more than double, says Wang, who says he once cornered two-thirds of the Chinese gold forward contract. "Spot gold prices will hit $2,000 in coming years," he stated.

Wang is also expecting a massive 15 percent of Chinas current market capitalization of 35 trillion yuan to move from stock investments to gold, meaning a good 5.25 trillion dollars is being earmarked for gold investment.

So when it comes down to when to buy gold, the astute wealthy Chinese investors say now and they are going to be right up there in the front of the queue!

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