China is already one of the world’s biggest gold buyers, but gold prices are expected to increase as more Chinese investors buy gold, and growing prosperity results in higher demand for gold jewelry. China has a unique role as the world’s largest producer of gold and its largest consumer. The government’s new gold exchange for the yuan has the central bank aggressively increasing its gold reserves while private consumers and investors are also putting increased pressure on gold markets.
Excluding central bank purchases, Chinese gold consumption increased 16% in 2017. That includes demand for both gold bars and gold jewelry. While demand for gold bars was up a remarkable 44%, jewelry consumption saw a more modest 7.4% increase in the same period. There are a few factors behind Chinese gold demand:
1. E-Commerce – More Chinese consumers buy gold jewelry and gold bullion online. Even as gold prices rose through 2017, China saw continued growth in jewelry demand. E-commerce options have expanded the reach of gold jewelry stores, especially among rural or remote consumers.
Online gold dealers aren’t only having an impact in China. Online gold dealers like Silver Gold Bull are replacing TV sellers in North America. Whereas all those TV ads and late-night spots had to be paid for by higher premiums, online gold dealers offer much better deals and can compare prices with other gold dealers. Buy gold online in Canada and the U.S. from dealers like Silver Gold Bull to save on gold bullion products like gold bars, coins, and more.
2. Lunar New Year – India’s gold-buying season is in late summer and early fall. Gold plays a major role in fall harvest festivals and wedding ceremonies. In China, gold is a popular gift during the Lunar New Year. That leads to a predictable rise in gold demand every year.
3. Chinese Real Estate Profits – Chinese investors have been scouring the globe for real estate deals, buying properties in stable, Western countries like the U.S., Australia, and Canada for years. They’ve completely reshaped the real estate market in cities like Vancouver, and the same is happening in places like Toronto, Brooklyn, and Sydney. Private investors have seen their real estate investments grow significantly while others earn rent. That increased affluence means higher spending on luxury goods like gold jewelry or diversifying into gold bullion investments.
As a gold investor, get gold prices today and see how they stack up against recent years. If Chinese demand continues to grow despite rising prices, it’s a good sign that there’s a lot of growth left for gold prices.
No passive investment portfolio should be without gold bullion. Buying gold bars and coins is great for the longevity of your wealth, but news stories like growing Chinese demand are what get gold investors interested in bolstering their positions. It is not only gold safe, but at the right times, it has many potentials.
