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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (33654)	7/14/2005 7:59:29 PM
From: RealMuLan	Respond to of 116555

physical demand on Gold in China: there will be few people interested in buying gold bullion, but the demand in gold jewelry will definitely increase. why? most of people have no place to put gold bullion even if they buy them. And the safe deposit box in banks is far less popular in China than in the US. According to WGC, in Q1 05, the demand of gold increased 14% y-o-y in China, and the demand of gold jewelry increased 13% y-o-y in China. The demand in gold retail (in terms of tons) increased 36% y-o-y If I read it right, most of that 14% increase in demand was in gold jewelry. Yes, some people may engage in trading the gold, but will not be popular. Chinese have a tendency to buy gold when its price going up. Since the gold price is not that hot recently, not many Chinese will buy them. Generally speaking, except very few super rich people, vast majority of Chinese will spend their money on housing, education, health care, travel, fancy electronic "toys", or even prostitution<g>... Please don't take this personally<g>, gold bullion is for suckers<lol>

To: ild who wrote (33654)	7/14/2005 8:03:05 PM
From: regli	Respond to of 116555

ild, I assume you've seen this item. www2.chinadaily.com.cn Commercial banks get nod to sell gold bars (Shenzhen Daily/Agencies) Updated: 2005-07-13 11:07 China has allowed four major commercial banks to sell gold bars to their customers in the near future, in the latest move to boost demand in the world's most populous nation. The prospect of growing consumption in main buyers India and China and the launch of exchange-traded funds (ETF) in bullion trading cities are among the supporting factors for gold — a symbol of wealth and good fortune in China. Currently, individuals were only allowed to buy gold-backed certificates from Bank of China (BOC) and Industrial and Commercial Bank of China, dealers said. Account holders use the certificates to trade in gold instead of buying or selling real bullion. Two other banks, China Construction Bank and Agriculture Bank of China, would also roll out gold bar products soon, dealers said. “The China Banking Regulatory Commission has given an approval for these banks to start the business. The four major banks are preparing to launch gold bars for their customers in the near future,” said one regional dealer who covers the Chinese market. “This is the reason why I think China's gold consumption may rise by 10 percent this year. This is related to an increase in investment demand,” he said. Government officials could not be reached for comment, but an official with the Shanghai Gold Exchange said: “We can't prevent commercial banks from doing this kind of thing.” Gold is used in jewelery and is often bought as investment that can be sold in times of trouble. It is traded mainly in bars and a standard bar in the spot market is 400 ounces or 12.5 kilograms. China has taken a series of measures to open up its bullion market since gold hoarding was forbidden in 1949. Gold is now traded freely at world prices on the Shanghai Gold Exchange, and permission from the central bank is no longer required to operate as gold jewelery manufacturers, wholesalers and retailers. There was also speculation that Hong Kong would host an ETF trading in 2005 after a successful launch of the fund on the New York Stock Exchange late last year. The ETF is sponsored by World Gold Trust Services LLC, a subsidiary of the World Gold Council, and is seen as an alternative to investing in physical gold, which is an expensive buy for small retail players. China is both the world's fourth-largest gold consumer and producer. It produced a record 212.35 tons of gold in 2004, up 5.86 percent from the previous year and well above 90 tons in 1994. Dealers noted fresh physical demand from investors and jewellers across Asia as gold prices moved away from a 3-month high at US$443.60 ounce hit on June 24. The industry-backed World Gold Council said consumption on the Chinese mainland rose to 234 tons in 2004 from 207.6 tons in 2003, driven by the government’s move to liberalize the bullion market and the growing popularity of 18-carat gold. Of the 234 tons of gold consumed on the mainland last year, 9.8 tons was for investment purposes. Since March, China has allowed private investors to buy gold for investment online from BOC and other selected banks which are members of the Shanghai Gold Exchange.