The appeal of gold as an alternative investment is increasing in
China as its price hits new highs and is forecast to keep rising in
the mid to long term.
Stimulated by expectations of US interest rate cuts and soaring
global oil prices, gold reached an all-time high earlier this
month. Citibank estimated its price is expected to hit US$1,000 an
ounce this year.
Shoppers buy gold jewelry
in a shop in Nanchang, Jiangsu Province, on January 15,
2008.
The strong upward trend has attracted individual Chinese
investors such as Yao Yun. The chief financial officer of a
Shanghai-based foreign company bought 50,000 yuan (US$6,849) in
gold bars and the price has risen by 12 yuan per gram in just half
a month.
"I believe the price will keep rising," he said. "The stock
market is too volatile, and the real estate sector is subjected to
macro-control. Investing in gold is a good choice at this
time."
In Caishikou Department Store, a popular physical gold dealer in
Beijing, more than 100 people lined up to purchase bullion for the
Lunar Year of the Mouse on Nov. 22, the first trading day of the
products. More than 200 kilograms of the gold bars were sold within
1.5 hours. Moreover, the total subscription amounted to two
tons.
Li Xiang, a manager of the department store, said sales of gold
products surged more than 50 percent to 2.38 billion yuan in
2007.
Zhongjin Gold Cooperation Limited, a leading gold products
manufacturer in the country, said its bullion sales had kept a
steady growth of 50 percent month-on-month since July.
Paper claims to physical gold, which allows customers to use
money in their bank accounts to virtually buy and sell gold at
global prices, are also appealing to more domestic investors as
well as speculators.
Recent figures from the Bank of China (BOC) Shanghai branch show
that the transaction volume of "paper gold" reached 140 million
yuan last week, 30 percent higher than in the flat period before
gold started rising.
"Paper gold has entered the vision of more individual investors
recently because of the wide range of price fluctuation," said Xu
Ming, a gold analyst at the BOC Shanghai branch.
China Gold Association statistics revealed that gold investors
nationwide have exceeded 1 million. The number doesn't include
speculators of gold futures, which made a strong debut in Shanghai
on Jan. 9.
On that day, China gold futures contracts surged to the daily 10
percent limit minutes after trading started at 9 a.m. on the
Shanghai Futures Exchange (SFE). More than 6,000 clients traded on
the market.
Experts believe the China gold futures market will grow into a
leading global market as it was launched at a time when
international gold prices have repeatedly been hitting new highs.
Global prices jumped more than 30 percent throughout last year,
representing the biggest increase since 1979.
(Xinhua News Agency January 19, 2008)
