Investing In Gold And Silver For Capital Preservation And Appreciation

Gold Prices Are Driven By The Chinese And Indian Gold Demand

Due to their cultures, China and India are traditionally huge consumers of gold jewelry. Their outstanding economic evolution resulting in a greater purchasing power means a higher gold demand and, accordingly, greater consumption. The gold jewelry demand rose by 43% internationally, and only India accounted for a staggering 25% of gold jewelry consumption.


Due to their cultures, China and India are traditionally huge consumers of gold jewelry. Their outstanding economic evolution resulting in a greater purchasing power means a higher gold demand and, accordingly, greater consumption. The gold jewelry demand rose by 43% internationally, and only India accounted for a staggering 25% of gold jewelry consumption.

The Chinese retail investments in gold meant a 44% rise in gold demand. The investors went for gold against other assets such as currency, being afraid of the higher interest rates banks were expected to charge. Central banks too are great consumers of gold, preferring this vehicle for their assets. This being the evolution of gold demand in China, it is no wonder that this country succeeded in overtaking the other great global gold consumer – India, by accounting for 18.7% of the international demand, by comparison with the 12.1% of India, at least in the first two quarters of 2009. In these conditions, the expectations of the WGT are that both gold jewelry demand and the demand for gold bullion and coins are going to increase, private citizens and investors alike playing an important role in maintaining gold demand high.

This incredibly high demand is expected to determine a continuous increase in gold prices. Understandably enough, the purchasers\’ philosophy is to buy either gold jewelry or gold bars and coins now than to buy them later, for higher prices. This quarter only, the gold price has risen by 20%, whereas the gold demand has risen only by 12%. So why to wait? Both India and China have already witnessed record gold prices, of 8,480 Yuan, respectively 56,032 rupees an ounce. The fact that China is presently meeting its demand from its own sources represents just a temporary relief, given that the increasing demand is likely to be soon too high for the limited supply available.

India, on the other hand, is already a massive buyer from foreign sources. Considering its 25% of gold jewelry consumption and its 19% gold investment of total demand, no one should wonder that gold price reached a record for a quarter, globally.

It is a rule of thumb that greater demand involves higher prices, and it is only to be expected that these two giant gold consumers will drive prices accordingly.

When making up your mind to invest in gold consider purchasing Gold Bullion coins, which are 99.9% pure.

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