China's 2018 Gold Buying: Half-Empty, Half-Full

IMG Auteur
Published : March 09th, 2018
684 words - Reading time : 1 - 2 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
[titre article pour referencement]
0
Send
0
comment
Our Newsletter...
Category : Gold and Silver
Analysts split on China's demand as gold jewelry tastes change...

LEADING ANALYSTS are split over the prospects for China's private gold buying in 2018, as a "healthy outlook" from one consultancy contrasts with a "tough year in store" from another.

"China's gold demand is likely to have peaked in 2013," says Thomson Reuters GFMS, "and is very unlikely to return to those levels in future, regardless of the state of the domestic economy."

Most notably, household demand for gold bars was "sluggish" through most of 2017, GFMS says, while consumer taste in jewelry continues to shift away from pure gold to lower-carat fashion items sold at higher mark-ups.

Having risen for 3 years running however, China's gold investment demand is set to grow another 6% in 2018 counters analysis from Metals Focus, while the gold jewelry market "bottomed out in 2016 and is undergoing a modest recovery.

"The main driver behind this promising turnaround has been the improving Chinese economy and its positive impact on consumer sentiment."

Data from China's National Bureau of Statistics say the world's second-largest economy grew 6.9% in Yuan terms in 2017 – yet again meeting the Beijing politburo's official target – with gross domestic product expanding to more than CNY 82 trillion.

Household gold demand for jewelry and investment combined grew 4.2% by weight meantime, recovering more than half of 2016's steep fall according to data compiled by Metals Focus for mining-backed market-development organization the World Gold Council. 

On a quarterly basis, China's private jewelry and investment gold demand historically peaks in the January to March period, when the Lunar New Year holidays and gift-giving celebrations spur the heaviest household buying.

On BullionVault's analysis, 2013 was the only year since at least 1997 when Chinese household spending as a proportion of GDP peaked outside of Q1, rising to a record peak at 0.94% as Yuan and global prices then sank in gold's worst quarterly crash for 3 decades.

Chart of China's household gold buying as a percentage of GDP. Source: BullionVault

"The reality is that the Chinese community is shifting from treating gold jewelry as a safe haven asset to a fashionable complementary," writes senior GFMS precious metals analyst Samson Li.

"This is especially noticeable with younger generations."

Metals Focus also notes China's changing tastes, but sales of 999 purity items "were flat [in 2017] compared to the sharp declines recorded in previous years," leaving sales of both lower-carat fashion and higher-carat luxury pieces "to lift the total" weight demanded overall.

Here in 2018 "show rooms were very busy during our visits to Shenzhen in January," Metals Focus goes on, also reporting and forecasting growth in sales of gold investment bars through non-bank channels, plus greater interest "from sophisticated, often high-net worth investors looking at gold as a portfolio diversifier."

GFMS also points to gold as investment diversification, tempering its more gloomy outlook with the caveat "barring any huge market panic".

"Most coverage of china's debt problem has rightly focused on its corporate sector," says a note on the Financial Times' Alphaville blog.

"Chinese households, however, are quickly catching up. This is bad news."

Latest available data suggest Chinese households had outstanding debts equal to some 106% of their disposable income, the FT explains – very nearly the same level as US households, but shooting from just 40% a decade earlier while US indebtedness "has been basically flat" since falling after the global financial crisis.

Now the No.1 gold consumer nation by weight for 5 years running, China has also been the No.1 gold-mining producer since 2007, although output fell over 9% last year amid tighter environmental regulation of the sector by Beijing.

Among official reserves, the People's Bank of China remains the 21st Century's heaviest gold buyer to date. Now reporting the fifth largest total (behind the US, Germany, Italy and France) with bullion reserves of 1,842 tonnes, the PBoC has added more than 1,447 tonnes since the start of 2000. That's just ahead of the 1,406-tonne addition taking Russia to No.6 among national gold holders with reported reserves near 1,839 tonnes.
You can receive your first gram of Gold free by opening an account with Bullion Vault : Click here.
Data and Statistics for these countries : China | France | Georgia | Germany | Italy | Russia | All
Gold and Silver Prices for these countries : China | France | Georgia | Germany | Italy | Russia | All
<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
Adrian Ash is head of research at BullionVault.com, the fastest growing gold bullion service online. Formerly head of editorial at Fleet Street Publications Ltd – the UK's leading publishers of investment advice for private investors – he is also City correspondent for The Daily Reckoning in London, and a regular contributor to MoneyWeek magazine.
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Boomer Elegy
12:59Gypsy
Good Grief James ! You and I are of the same generation, lived absolute opposite lives yet ~ almost ~ came to the same conclusion. I was raised Ba...
Ayn Rand's Hymn To Money
02 Aprgfs543
Thank you, Professor Fekete, for an outstanding tribute to honest money.
Black Swans, Dead Cats, Live Bats, and Goodbye to All That
26 MarJ.
We will have to wait and see. It all comes down to demand. The current glut of supply will probably take a couple of years to clear. After that,...
Black Swans, Dead Cats, Live Bats, and Goodbye to All That
22 Marrokdok25
J - surely James' point is that shale oil is fundamentally uneconomic, in the past and certainly in the present. If and when the wheels of industry...
Things Have Changed
18 MarMr. Gnawbone
I enjoyed this article JHK, I been long expecting and have lived a full and beautiful life, but I raised my children to prepare and they are doing ...
Black Swans, Dead Cats, Live Bats, and Goodbye to All That
16 MarJ.
JHK - sometimes I wonder if you understand economics. Oil is cheap 'because' demand is down, and supply is way up. So, energy inputs to the ec...
Black Swans, Dead Cats, Live Bats, and Goodbye to All That
15 MarThemis0
I suspect Hillary, or her clone, is waiting in the Dem wings.
Like WTF? Gold Crashes with Stocks!
15 MarThemis
What I don't see in this article is a differentiation between the price of paper and physical gold, which I believe to be decoupling.
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS