China's gold production
continues to increase and reached 226,388 metric tons in the first eight
months of this year. This corresponds with an increase of 3.87% compared with
the same period last year, as China's Ministry of Industry and Information
Technology announced yesterday. In the last decade China has become the
world’s largest gold producer, and observers expect the country to
surpass India as the world's largest gold consumer soon.
In August alone, China produced
31.89 metric tons of gold. The total value of gold produced by China's mining
companies reached $26.55 billion in the first eight months of this year. This
corresponds with an increase of 23.14% compared with the same period last
total gold output set new records in 2010 by reaching 340.88 metric tons.
Observers expect China's domestic gold producers to surpass this level by the
end of this year.
However, India is still the
world's largest importer and consumer of gold. Despite rapidly rising gold
prices, India accounted for more than a third of global gold demand in the
first half of this year. Gold sales by Indian traders rose 21% year-on-year.
Indians bought a total of 540 metric tons of gold in the first six months of
2011, with the country's gold demand rising by 38% in the second quarter.
China's gold demand picked up by 25% during the same period. Experts and gold
traders expect India's festival season – kicked-off by the Diwali
festival of lights this month – to set new sales records this year.
Silver sales are expected to rise by around 30% compared with the previous
Despite India's rapidly rising
appetite for gold, China could surpass India's physical gold demand by the
end of this year, as Goldcorp
CEO Chuck Jeannes noted in late July. High inflation in China is probably
one of the main reasons for the rising appetite for precious metals among
domestic investors. Inflation reached 6.1% in
September, slightly down from 6.2% in August, though food inflation jumped to
the slight decline (0.1%) in the country's inflation rate in September, this
figure remains well above the official inflation target of 4%.
China's domestic investors view
commodities and other tangible assets as a means of protecting their wealth
and savings from the ravages of inflation. This primarily includes purchases
of gold and silver in the form of jewellery, coins
or bars. China's investment demand for these metals more than doubled to 90.9
metric tons in the first quarter of 2011. In the wake of this rapidly rising
gold demand, China has become the world's largest market for coins and
bullion bars – beating India for the first time ever, according to a
World Gold Council report from May. However, India remains the largest global
gold jewelry consumer. Though many analysts continue to predict a fall-off in
Asian demand owing to higher and higher gold and silver prices, economic
problems all over the world – an concerns over
currency debasement – are continuing to drive more and more Asian into
buying gold and silver.
Originally published on