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The key drivers for gold demand look set to stay

by , 26 May 2014

China is a massive consumer of gold. Last year saw record levels of consumer demand. Its emerging middle class are buying gold jewellery and coins. And the Chinese government is stocking up on the yellow metal. Experts believe this is an attempt by the Chinese government to move its foreign reserves away from the dollar and into gold. The relationship between China and gold serves as a reminder of the importance of the yellow metal. And the demands on gold don't look like they're going to disappear. Let's take a closer look…

How much gold does China have?

No-one is sure of how much gold the Chinese government actually has. The People’s Bank of China may be increasing its gold reserves in a bid to move away from the dollar, but the figures involved are estimates.

China doesn’t reveal any figures about how much gold it imports, Frank Holmes in Money Morning US explains.

Last week, Mineweb reported that China had deemed Beijing an additional import city for gold. So even more gold can make its way into China unreported.

The only way to track how much gold China imports is to look at the countries that export gold to China.

But regardless of how much gold China has its hands on, the country reflects the key drivers of gold demand.

Gold looks set to continue to sparkle

Many countries and investors across the world share China’s faith in gold. And this will continue to drive demand for the yellow metal…
  • There are concerns about the effect of government policies on currencies. Pumping extra money into the system devalues them. And this makes gold attractive.
  • As people become wealthier, they’ll spend it on gold.
  • People will continue to buy gold as gifts for cultural and religious reasons.
So there you have it, why the key drivers for gold demand look set to stay.

The key drivers for gold demand look set to stay
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