China is becoming a gold powerhouse

China is becoming a gold powerhouse

by Jeremy Holcombe Contributing writer for Goldco Direct and End the Lie

Over the last year or so China has been quietly and independently buying gold, lots of gold.

While many know that China has wanted to become a power player in the world of precious metals (particularly gold), not everyone knows what a powerhouse they are starting to become.

Gold buying, gold production and gold profit out of China has risen considerably over the last year.

So much so that China is starting to become a major gold powerhouse, and they are showing no signs of slowing down.

Not only is China becoming a major powerhouse in the gold world, but at the current rate of gold buying and gold producing,

China is poised to become the world’s biggest gold market in 2012. This will especially hold true if demand for the precious metal continues to surge as it has over recent years.

Right now India is the world’s largest consumer of gold. However, China has already passed India’s monthly figures for gold, but we still have to wait to see a full year’s worth of figures from China to see if they have outpaced the Indian gold buying spree.

If the predicted numbers are on point, China will be the biggest dog on the block when it comes to the world of gold.

How are they doing this? Well, believe it or not, even with their poor credit history, China has an almost unlimited amount of cold hard cash (unlike the United States which is essentially surviving solely on credit at this point).

We all know that cash is king, and they are using that cash supply to purchase as much gold as they can get right now.

China produced around 24.13 tonnes of gold in January 2012, an increase of 3.68% from the same month a year ago.

In February of this year, China’s gold output jumped 11.3% from January.

Data shows that output for the first two months of the year rose 8% to 51.005 tonnes. In February, China produced around 26.87 tonnes of gold.

Profit streams are up tremendously as well for China, which gives them all the more reason to continue buying the yellow metal.

They have also been advised to continue buying up gold by several key figures in China.

“The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation,” Zhang Jianhua, director of the research bureau affiliated with the People’s Bank of China has been quoted as saying.

We will see how this plays out, but it seems as though China very well may continue to buy gold and try to become the largest gold holder and producer in the world.

This will be quite interesting as it could have some widespread consequences and a large impact on the global financial market.

It very well could mean a weakening of the Western power over markets, although what this will actually bring about is anyone’s guess at this point.

The above article is for informational purposes only and is not a solicitation by End the Lie or Goldco Direct. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of End the Lie or Goldco Direct. Any references to outside sources are believed to be accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial adviser before making any investment decisions.

Sources:

EndTheLie

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