http://www.bloomberg.com/news/2010-...vefold-as-inflation-outlook-spurs-demand.html China's gold imports jumped almost fivefold in the first 10 months from the entire amount shipped in last year as concern about rising inflation increased its appeal as a store of value, said the Shanghai Gold Exchange. Imports gained to 209 metric tons compared with 45 tons for all of 2009, Shen Xiangrong, chairman of the bourse, told a conference in Shanghai today. China, the world's largest producer and second-biggest user, doesn't regularly publish gold-trade figures and rarely comments on its reserves. Bullion soared 27 percent this year as the dollar dropped on concern that the trillions of dollars governments are pumping into the global economy may debase the value of currencies. China has pledged to use price controls and may raise interest rates a second time this year to slow inflation that has gained to the highest level since 2008. "The central bank may now be approving all gold import" applications, Albert Cheng, managing director of the World Gold Council's Far East department, said in an interview. "The government hasn't officially said that China is encouraging private gold investments, but we in the industry suspect it. And you can see the big jump in the delivered gold imports through the exchange has to be approved by them." Gold demand in China gained in the first half as government measures to cool the property market and falling equities spurred investment, the gold exchange said July 7. About 70 percent to 80 percent of the imports in the first 10 months were made into mini-gold bars, which Chinese investors like to hold, the exchange's Shen said. Inflation Expectations "Given China is the world's biggest gold producer, the sharp increase in its imports is a big surprise," said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. "People there need to buy gold to hedge against inflation as the country's tightening monetary policy drives investors from stocks and properties to gold." China's consumer prices jumped 4.4 percent in October, the fastest pace in two years, and above the government's full-year target of 3 percent. China's central bank raised interest rates in October for the first time since 2007 and ordered banks on Nov. 10 and Nov. 19 to hold more money in reserve. "The expectation for higher inflation has fueled great interest among investors to hold physical gold, which led to higher imports," the gold exchange's Shen said. The exchange traded 5,014.5 tons of gold in the first 10 months, up 43 percent from a year ago, Shen said." Rest of the article is on the link.
Fiat keeps on purchasing less gold these days. I remember seeing a huge billboard in China this year with gold bullion coins on it. I wish I had a photo of it. It was not so long ago India purchased a massive amount of gold at approx $1000 an oz. No regrets there I'm sure.
