Is China Cornering the Gold Market?

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Last Updated on: 25th December 2020, 06:27 am

Recent reports and findings suggest that China is buying up supplies of gold in record numbers. China is now accounting for a majority of the gold bought. The recent upswing in China’s purchase of gold have some investors wondering what exactly is going on. Analysts contend that China may be attempting to corner the market on gold, however, that is not a bad thing. Experts suggest that the price of gold will once again rise after experiencing a lull in 2011 and 2012, which means, now is the right time for investors to get in on the gold market.

China Will Have 50% of the World's Gold by 2017

In 2013 China was the top buyer of gold in the world, scooping up 1,132 tons of the metal. Demand for gold has been increasing in China and it appears the same will be true in 2014 and beyond. Experts argue that demand for gold in China will rise some 20% through 2017 and about 1,300 tons of the metal will be bought each year. If the 20% increase is correct, China may buy up about 50% of the gold produced each year. Currently, China accounts for about 41% of all gold purchases. The other 59% of gold being mined is spread across most other first world countries.

The amount of gold that Chinese citizens and the government are buying suggests the country is aiming to corner the market on gold. This makes sense. Gold is a sound investment and the prices rise and fall as demand changes. With that being said, China is also an incredibly populous area, and the number of people in the nation account for the reason so much gold is heading into China instead of other parts of the world.

Why is Chinese Demand for Gold so High?

Many investors and experts are wondering exactly why the demand for gold is so high in China. Well, the answers aren't simple, nor are they completely clear. Some experts argue that China is buying up gold because they feel particular at risk because of the amount of paper money being created and utilized in the nation. That is to say, they are at risk of the paper money bubble burst. Some experts argue that the Chinese are being particularly cautious and buying up gold supplies in an attempt to create a subconscious gold standard. Where paper money can falter, gold never does.

Other theories suggest that China will buy up gold in an attempt to push the gold standard back into the business world, which hasn't utilized the gold standard in a number of decades. Both theories are just that, theories, but it can be argued that both are feasible in their own rights. Gold, above all else, is a sound investment for those looking to ensure their future, point blank.

Is Gold Still A Sound Investment for The Average Investor?

The simple answer is that yes, gold is still a sound investment, perhaps more so now than in previous years. Because China is creating high demand for gold right now, the prices are expected to swing upward through 2017. Higher demand by China means that there will be less supply of gold overall, which will raise the price of gold. While gold took a hit in 2012 in terms of pricing, it is trending back upwards. Analysts and experts suggest buying gold now will yield a high return in the next several years, as the price of gold is expected to rise because of the increased demand.