As expected in the context of economic recession, accompanied by inflation and distrust in currencies, and in the context of bankruptcies of major banks and distrust in bank assets, hard assets have become more valued and sought after by investors. This accounts for the increase of 30% in the gold price and the increase of 83% in the silver price this last year. But the optimistic prospects of both precious metals are far from being over, in China for one, both witnessing major developments in the context of a frantic demand. As such, lines of people waiting to buy gold jewelry may be seen every day, as well as retail investors rushing to buy gold bars by the kilo. No wonder then that jewelry shops think they will see a 10% increase in gold rates this year, while shopping malls expect to see investors buying even 10 kilos of gold once.
Faced with such an incredible demand, China is not only importing gold from any Western banks or holdings willing to sell, but it asked its banks to sell in turn their gold to interested investors. The most important Chinese bank sold thus 7 tons of physical gold in January (while it sold 15 in 2010) and 13 tons of silver (while it sold 33 in 2010). Besides, it decided to sell gold bars to retail investors, which can be resold later for money through the bank, subject to real-time gold rates. In this way, gold retail investment in China is forecast to increase by 10%-15% in 2011.
The bank has offered non-physical gold investment products as well, more precisely gold-price-linked term deposits. They were demanded so eagerly that the 1 billion Yuan-worth ones issued by the bank last year were bought by clients in a matter of several days this January.
Not only in China, though, are retail investors increasingly diversifying their portfolios with gold. After all, the annual appreciation of gold by circa 17% over the last nine years is known to investors worldwide. As such, the demand for the tangible asset has made some providers of gold bullion in the U.S.A., for instance, worth more than 1 billion dollars on behalf of their gold investing clients.
It’s as known a fact that new gold discoveries have become rarer, with the quantity of gold discovered falling sharply from circa 90 million ounces in 1997 to circa 10 million ounces in 2008. Therefore, it is to be expected that the frantic gold demand in China and across the world will increase even more in the price of gold in the foreseeable future.
An option to invest in gold is by purchasing a gold bar once; you will see how many dollars this will save you.