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Signs point to China as top gold importer

Signs point to China as top gold importer

June 20, 2012294 view(s)

The top position for investing in gold in Asia has been held by India for quite some time. This appears to be changing now, however, as experts are pointing to China to take the top spot for importing gold due to demand reaching the highest levels seen so far during the first quarter of 2012. The Wall Street Journal noted that April was a particularly strong time for China in boosting its gold assets, mostly because imports from Hong Kong rose by a full 65 percent compared with levels seen in March. April, March and February of 2012 all saw import levels rising for the yellow metal.

The data being cited for these figures comes from Commerzbank, a German bank, that built the data using findings from Hong Kong's Census and Statistics Department. The reason this was done was due to the fact that China does not officially disclose figures on the importation of gold. Despite this, investors in the Asian nation are known to value gold assets as a hedge against macroeconomic changes in a similar way as to how investors do in other nations across the globe today.

While India's demand is slipping for reasons including the monsoon season it faces each year, several voices in the current media are saying that they believe China will continue on a trajectory that sees it surpassing India in terms of investing in gold. The country already produces collector quality investment coins of gold bullion. A growing middle class means that China, which now has a yuan with buying power that compares well with the U.S. dollar, has a great deal of buying power when it comes to wealth shoring purchases such as gold.

The CEO of U.K. gold bullion brokerage firm Sharps Pixley, Ross Norman, told the press, "It does seem that China is picking up the slack in the system from a weaker India."

A tax on gold in India on the other hand, while discontinued, still dampened the enthusiasm on gold investors in that country. In addition, the rupee is not performing as well as it has in the past, partly due to a slowdown in the Indian economy. This lowering of the rupee's buying power makes gold a very expensive purchase, a mere 10 grams costing the equivalent of $536. This a fairly steep price compared with what investors have been used to.

UOB Kay Hian's senior analyst on metals and mining, Helen Lau, was reported as saying, "Inflation [in China] is high and there is a low chance to invest in property and little desire to participate in the stock market. But disposable income is rising and people want to protect their wealth."

As these market forces continue to make themselves felt in the global economy, gold prices are bound to change. This could be great news for those looking to get into investing in gold. Of course, fluctuations are bound to occur over time, but the prediction does look good for the rest of 2012.

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