The Chinese economy has been exploding for the last decade or so. They are quickly becoming a world economic superpower because of it. As their citizens get richer, just like most other countries in the world where this is happening, they want better consumer products. One of these happens to be gold, which they are now buying in record numbers.
The Chinese government also has invested tremendous sums of capital into US issued Treasury Securities. Since the US economy has not been doing so well, they are looking to diversify their portfolio by purchasing more gold.
The everyday Chinese consumer cannot only purchase gold jewelry, but they can also buy both gold bars and gold coins issued by their government. In fact, the government is currently emphasizing this type of investment as a way for its citizens to also expand their financial holdings.
All banks in China sell gold, even the very small banks in extremely tiny villages. There are also official Chinese Mint stores that have been set up by the government all over the country. These stores look like jewelry retail outlets since they have glass viewing cases and armed guards everywhere.
But, the consumer does not see diamond rings, but gold bars, coins, and jewelry. The bars are .9999 pure, and they range in size from 5 grams to 1 kilogram. Just like all other types of establishments all over the world that sell gold, the price fluctuates daily based on the spot price.
However, China uses the Shanghai gold markets spot price, as opposed to what most other countries use, which is either New York’s or London’s spot price. China is changing in so many wonderful and fascinating ways, and the extremely large consumption of gold by both its government and its citizens, is but one of them.