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The
Industrial and Commercial Bank of China (ICBC), the world's biggest bank in
terms of market capitalisation, announced in a
statement yesterday that China's demand for gold literally exploded in 2010.
Especially the middle class was eager to diversify its assets in order to
hedge against the monthly rising domestic inflation. The majority of gold
investors focused on physical gold purchases.
As Zhou Ming,
deputy director of the precious metals division at ICBC, told the news agency
Reuters yesterday, his institute sold about 15 tons of gold to domestic
investors in 2010. It was remarkable that the physical demand among investors
had already reached 7 tons in January 2011. So far, all data pointed to a new
sales record in 2011.
Zhou
explained how China's savers and investors were highly concerned about the
drastically rising inflation of the last few months. The central bank
People's Bank of China (PBC) had not yet managed to slow down the escalating
credit growth among China's domestic banks. The PBC's credit growth target
had been highly exceeded in 2010, just as in 2009.
China's
gold imports also surged drastically in spite of an 8% increase in the country's
gold production. Despite being the biggest gold mining country in the world,
China is now advancing to become the world's biggest importer of gold, too.
Analysts stated that China would replace the gold savvy India as the world's
biggest importer of the yellow metal in the near future.
As Zhou
further stated, China's government encouraged the population to make
investments in the gold sector, while further liberalising
the domestic market. The gold price should therefore expect further support.
Zhou explained that the demand in China had started from such a low level
that huge growth rates could be expected over a longer period of time. The
government hopes that its strategy will slow down future demand in the
property sectors of the country's urban centers in order to prevent the
bursting of a potential price bubble at the housing markets.
Not only the demand for gold but also for silver had risen strongly
in the past year. While the ICBC sold a total of about 33 tons of the white
metal in 2010, the physical sales had already reached 13 tons in January this
year. Based on the current developments, new sales records were expected in
the silver sector as well.
Roman Baudzus
Goldmoney.com
All data and quotes sourced from Reuters.
Published by GoldMoney
Copyright © 2010. All rights reserved.
Written by Gillian Campbell
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