Gold A Slam-Dunk Sell in China As ‘Aunties’ Buy Bullion (By Paccosi)

Wearing a thick coat to protect against the autumn chill while standing outside Beijing’s busiest jewelry store, Yang Cuiyan, a 41-year-old housekeeper from Anhui province, clasps a gold necklace she paid 10,000 yuan for ($1,640), or five months’ wages. She is another reason China is poised to topple India as the world’s top consumer of gold even as investors worldwide desert the yellow metal.

“I don’t know anything about the stock market and I don’t have enough money to buy property, so I figured gold is the safest choice,” she said. “I can put it on when I go back home to show everyone that I’m doing well.”

Buy gold bullion:

Yang journeyed 650-mile from her rural home (1,000-kilometer) to the Chinese capital to shop and visit relatives. Ms. yang is one of the growing legions of middle-aged Chinese women, respectfully called ‘aunties’, who bought gold jewelry and gold coins this year, 2013, adding support to the gold market while it’s shunned by many professional investors who began deserting the metal as a store of value in early 2013.

The world’s second-largest economy is gold bullion! Bullion consumption in 2013 surged 29 percent to a record 1,000 metric tons, according to the estimates from traders, analysts, and gold producers in China surveyed by Bloomberg News.

That demand may ease up 2.4 percent in 2014 from this peak which points to purchases greater than any other nation and more than the U.S., Europe and the Middle East “combined.”

Buy gold bullion: In the 12 months to September, 2013, China’s demand for gold jewelry, bars and coins rose 30 percent to 996.3 tons while usage in India gained 24 percent to 977.6 tons, almost “1,000 Tons” each for just 12 months! Wow, that is a whopping record for one year’s purchases according to the London-based World Gold Council. No. 1 country for gold purchases for calendar 2012 was India once again.

“In China, you look around and see very few places to put your money,” said Duan Shihua, a partner at Shanghai Leading Investment Management Co. “With the share market down and the government nudging people away from real estate, gold will remain a favored choice.”

Another “Driver of Gold” are the Gold-Laden Brides in India. ‘Everyday’ in India, there are thousands of brides getting married and it is traditional societal etiquette to give “Gold jewelry” as a gift as it is so highly prized there. India and China are alike in this issue which is another “Driver” under the demand for [more Gold].

Slam Dunk:
After a 14 percent [drop] in gold prices in two days in April, 2013, images in the Chinese media of ‘aunties’ clearing shelves in gold shops illustrates a demand for gold bullion that defies the views of the biggest banks in the West and underscores the limited investment choices in China. The world’s most successful investor, Warren Buffett, said the metal has no appeal to him, and the Goldman Sachs Group Inc. commodities research chief, Jeffrey Currie, who correctly forecast the rout this year, on Oct. 8 called it a “slam dunk” sell for 2014.

Gold Price Forecasts:
Bullion is 34 percent below the record set in 2011 and on course for its first annual [loss] since 2000 after falling 24 percent to $1,276.64 an ounce in London this year. The GSCI gauge of Standard & Poor’s of 24 commodities [fell] 5 percent since the end of December, 2013 and the Bloomberg U.S. Treasury Bond Index [lost] 2.1 percent. While the MSCI All-Country World Index of equities surged 18 percent over the same period, the Shanghai Composite Index fell by 3.4 percent.

According to the median of estimates from the 10 most-accurate precious metals analysts tracked by Bloomberg in a survey published last month, Bullion will average $1,175 in the third quarter of next year. Prices were last at that level in 2010. Goldman expects prices at $1,050 by the end of 2014.

While urban per capita disposable income rose 9.5 percent, China’s rural per capita cash income in the first nine months jumped by 12.5 percent from a year earlier, the National Bureau of Statistics shows. The Chinese economy grew 7.6 percent this year, 2013, and forecast to grow 7.4 percent in 2014, according to the median of estimates compiled by Bloomberg.

Worldwide, China ranks fourth for people with $1 million or more in investable assets, after their number of high-net-worth individuals in the country rose 14 percent to 643,000 in 2013, according to a report by Cap Gemini SA and Royal Bank of Canada. The U.S. ranks first for the most millionaires, followed by Japan and Germany.


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