Saturday, May 9, 2015

China Daily: New Trade Initiatives to Spur Gold Demand

The move by China to increase gold reserves is of course one of the main news stories related to potential monetary system change we cover here. This China Daily article just adds more fuel to the fire of speculation about how much gold will move to China in the future. Below are some quotes from this article.


"Gold demand is expected to rise in China and other Asian countries along the "Belt and Road" routes in the coming few years, the China Gold Association said on Tuesday. In a report on the likely impact on the gold market, official estimated that the 65 countries along the routes and their combined 4.4 billion population, currently account for more than half of the world gold production and 80 percent of the consumption.

"Asians have a tradition of collecting gold," said Song Yugin, deputy general manager of the Shanghai Gold Exchange. The gold trade is expected to become a significant component of the transactions by 'Belt and Road' countries."

. . . . .

Last year, China and India's demand for gold jewelry and bars accounted for 54 percent of the world total."                  . . . . 

My added comments: 
It should be added that this same situation applies to silver. There 4.4 billion people (and growing) who will continue to create potential demand for both gold and silver in coming years no matter what Americans may do.

In the case of silver, if 25% of these 4.4 billion people want some silver each year, the world only produces enough for each person to buy 3/4's of one ounce each (if they bought every ounce produced annually). Assuming only about 200 million ounces a year are even available after industrial use, that leaves only 1/5th of an ounce available per year. This is if no one in the US or Europe buys and silver at all.

This situation will impact the price of silver (and gold) eventually whether we have another financial crisis or not.

Added note 5-12-15: Koos Jansen publishes this new article which explores this topic in more depth.

No comments:

Post a Comment