'Fear' has been described as the chief driver of gold in the West. When
all is gloom and doom in business and the economy, we look towards gold as a
safe haven.
In the emerging economies of the East, 'love' is said to be the compelling
factor. People have an affection for gold bordering on fanaticism - and it's
not limited to sophisticated investors.
There's been a deep cultural affinity with gold in India
and China for generations. It's viewed as sacred, a symbol of purity,
prosperity and good fortune. This can clearly be seen during major
celebrations such as the Diwali Festival of Lights and the wedding season in
India, and the New Year and National Day Golden Weeks in China.
Gold in the form of jewellery
is a particular obsession in both countries where buyers believe that as well
as being an essential adornment, it is also a sound investment.
Did you know that over 10
million weddings take place in India annually? It's been calculated that
between 30 to 50% of wedding expenses are gold!
China's passion for gold is
now being spurred by the growth of its middle-class, forecast to reach 500
million in the next 10 years. That's in a country that already has more than
1 million millionaires!
Is it any wonder that these
two nations vie with each other as the world's largest consumers of gold?
Whereas retail investors in the West tend to purchase gold when the price
is rising, Eastern buyers are perhaps more canny, buying when prices correct.
So don't be surprised if the global flow of gold from west to east continues
strongly now that prices have retreated from recent highs.
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