Gold investment in China skyrockets in 2010

16:41, December 29, 2010      

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During the global financial crisis in 2008, gold was highly sought after as a safe haven asset amid the financial turmoil. International gold prices topped 900 U.S. dollars per ounce, and then broke 1,000 U.S. per ounce dollars in 2009.

The gold price has risen more than four times over nearly 10 years of bull markets. In particular, after the financial crisis hit the global market, gold, as a risk "stabilizer" and asset "safe haven," constantly hit new highs.

In 2010 alone, the gold price went beyond the expectations of almost all institutions and topped 1,400 U.S. dollars per ounce at the end of this year.

Although the weak dollar is the main factor that supported this current bull market in the gold trade, the actual growth of the gold price is far higher than the depreciation of the dollar, said Zhou Hongtao, a member of the qualification evaluation experts committee of the China Gold Investment Analyst.

The consistently rising gold price in the last 10 years is a confirmation of the value of gold and the unique financial and monetary properties of gold, Zhou said.

Besides the debt crisis in Europe and the quantitative easing policy of the United States, the potential of the Chinese gold market in 2010 is undoubtedly the highlight of the world gold market.

In August, six ministries, including the People's Bank of China, the National Development and Reform Commission and the China Securities Regulatory Commission, jointly issued a notice to promote the gold market and positively connected the future development of the gold market with the competitiveness of financial markets.

In 2009, China's gold output reached 314 tons, ranking first worldwide for three consecutive years and laying a solid foundation for the development of its gold market. The gold market now has become an important part of China's financial market system.

China not only has established the world's largest floor market for trading spot gold, but in recent years, with the delay of the spot gold and the opening of gold futures and other important investment products to individuals, China's private gold investment market witnessed an explosive growth.

In the first three quarters, the individual customers in Shanghai Gold Exchanges neared 1.6 million; gold trade exceeded 4,600 tons and its turnover topped 1.1 trillion yuan, both rising sharply.

It is estimated that the world gold reserves stand at some 163,000 tons — about 30 grams per capita. But the per capita gold stock for Chinese is less than 4 grams, far below the world average level. So China's gold market has huge potential.

Experts believe with the expanding of the Chinese gold market, China will influence the world gold market and have more say.

The trend of global gold in 2010 is closely linked with the major currencies.

During the first half of this year, with the shadow of sovereign debt crisis in the euro zone, gold price continually refreshed the record.

In the middle of this year, the gold price dropped due to the mitigation of debt crisis in the euro zone and the rebound of major world currencies. In November, gold price topped 1,400 U.S. dollars per ounce under the influence of the second quantitative easing policy of the United States.

By Liang Jun, People's Daily Online
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