Saturday, January 19, 2008

Chinese Love Affair With Gold

An alternative investment is increasing in China, the appeal of gold as its price hits new highs and analysts forecast the gold price to keep rising in the mid to long term.

The recent strong upward trend has attracted many individual Chinese investors such as Yao Yun, for example.. The chief financial officer of a Shanghai-based foreign company bought 50,000 yuan ($6,849) in gold bars and the price has risen by 12 yuan per gram in just half a month.

"I believe the price will keep rising," he said. "The stock market is too volatile, and the real estate sector is subjected to macro-control. Investing in gold is a good choice at this time."

In the Caishikou Department Store, a popular physical gold dealer in Beijing, over 100 people lined up to purchase bullion for the Lunar Year of the Mouse on November 22, last year. the first trading day of the products. More than 200 kilograms of the gold bars were sold within 1.5 hours. The total subscription amounted to two tons of gold.
Li Xiang, a manager of the department store, said, at the time, sales of gold products surged more than 50 percent to 2.38 billion yuan in 2007.

A leading gold products manufacturer in the country, Zhongjin Gold Cooperation Limited, stated that its bullion sales had kept a steady growth of 50 percent month-on-month since July last year.

And the China Gold Association has just release statistics revealing gold investors nationwide have exceeded 1 million.

That number doesn't include speculators of gold futures, however, which made a strong debut in Shanghai on January 9th when China gold futures contracts surged to the daily 10 percent limit minutes after trading started at 9 a.m. on the Shanghai Futures Exchange. More than 6,000 clients traded on the market.

Many experts believe the China gold futures market will grow into a leading global market as it was launched at a time when international gold prices have repeatedly been hitting new highs. Global prices jumped more than 30 percent throughout last year, representing the biggest increase since 1979.

China is truly having a love affair with gold!

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