World Gold Council 2014, China the world’s largest gold market – Agent4stars.com – The finer things in Life

World Gold Council 2014, China the world’s largest gold market

World Gold Council report 2014, China is the world’s largest gold market:

  •  increase from the current level of 1,132 tonnes(t)1 per year to at least 1,350t by 2017
  •  number one producer and consumer of gold since the market began liberalising in the late 1990s
  •  market will continue to expand, irrespective of short term blips in the economy.

By 2020  >  China’s middle class  will grow by over 60%, or 200m people, to a total of 500 million.(Total population of the USA  is 319m)

 Outlook for gold jewellery and investment demand in the next four years will remain strong.

Albert Cheng, Managing Director of the Far East at the World Gold Council said:

“Since liberalisation of the gold market began in the late 1990s and the subsequent offering of gold bullion products by local commercial banks from 2004, we have witnessed astonishing increases in demand for gold from consumers across the country. The cultural affinity for gold runs deep in China and when this is combined with an increasingly affluent population and a supportive government, there is significant room for the market to grow even further. The country is now at the centre of the global gold eco-system.”

“Whilst China faces important challenges as it seeks to sustain economic growth and liberalise its financial system, growth in personal incomes and the public’s pool of savings should support a medium term increase in the demand for gold, in both jewellery and investment.”

The key findings from the research include the following:

  • China’s continuing urbanisation means that it now has 170 cities with more than one million inhabitants – within these cities, the middle classes currently number 300million and are set to grow to 500million by 2020. Demand for gold amongst those with a greater disposable income and limited investment opportunities will continue to grow.
  • Chinese savings levels remain high – there is an estimated US$7.5 trillion in Chinese bank accounts and household allocations to gold remain small, around $300bn. Gold is seen as a stable, accessible investment by consumers, particularly in the light of rising house prices and a lack of alternative savings options. Chinese investors have a preference for physical gold over paper, with investment focused on small bars, gift bars or Gold Accumulation Plans (GAPs). New gold investment products mean that medium term demand for bars and coins could reach close to 500t by 2017 – a rise of nearly 25% above its record level last year.
  • China has become the world’s number one jewellery market, nearly trebling in size over the past decade – at 669t in 2013, it accounts for 30% of global jewellery demand. Estimates suggest that demand will continue to grow and reach 780t by 2017. There are now over 100,000 retail outlets selling 24k gold and thousands of manufacturers nationwide.
  • Consumer sentiment toward gold is unwavering – although 40% of jewellery consumption relates to weddings, the appetite for gold in China goes beyond occasions and gift giving. 80% of consumers surveyed for this report planned to maintain or increase their spending on 24-carat gold jewellery over the next 12 months believing that gold will hold its long-term value and because they expect to have a higher level of disposable income.
  • Chinese electronics demand for gold will see small gains in the next four years – industrial demand has grown with electronics being the key driver (climbing from 16t in 2003 to 66t in 20134). China is also the leading market for gold related patents such as the use of nanogold in healthcare.
  • Official gold holdings in China totalled 1,054t at the end of 2013 making the country the world’s sixth largest holder of bullion – based on this declared stock, gold represents 1% of China’s total official reserves (down from a peak of almost 2% in 2012) due to the rapid growth of the country’s foreign exchange holdings which reached around US$3.8 trillion at the end of 2013. Speculation continues as to whether the Chinese government has increased its gold holdings.
  • China has gone from being a minor producer to the world’s largest source of mined gold – in the past ten years production has doubled from 217t to 437t.

Chinese companies may have accumulated up to 1,000 tonnes of gold for use as collateral in financing deals rather than to meet consumer demand in recent years, a new study says.

The report by the World Gold Council said imported bullion was being used “to raise low-cost funds for business investment and speculation”, and was part of the wider growth in shadow banking in China.

The People’s Bank of China has not provided an update on its bullion reserves since 2009, when it reported a holding of 1,054 tonnes, making it the world’s sixth-largest holder of gold.Speculation abounds about a large trove of gold that seems to be missing from the global market. Analysts calculate that up to 500 tons or more are stashed away, based on the difference between China’s domestic gold production of 428 tons in 2013 plus its estimated gold imports of at least 1,158 tons, and its annual demand of about 1,066 tons. The Chinese government does not release an import figure, so this number is disputed.

As at December 2013 (Top 40 based on World Gold Council data)
Rank Country/Organization Gold (tonnes) Gold’s share of national forex reserves (%)
G6 (EU) 8,972.6 76%
1  United States 8,133.5 70%
2  Germany 3,387.1 66%
3 International Monetary Fund logo.svg International Monetary Fund 2,814.0 N.A.
4  Italy 2,451.8 65%
5  France 2,435.4 65%
6  China 1,054.1 1%
7  Russia 1,041.9 8%
8   Switzerland 1,040.1 8%
9  Japan 765.2 2%
10  Netherlands 612.5 51%
11  India 557.7 7%
12  Turkey 519.7 15%
13 Logo European Central Bank.svg European Central Bank 502.1 26%
14  Taiwan 423.6 4%
15  Portugal 382.5 84%
16  Venezuela 367.6 72%
17  Saudi Arabia 322.9 2%
18  United Kingdom 310.3 12%
19  Lebanon 286.8 23%
20  Spain 281.6 23%
21  Austria 280.0 47%
22  Belgium 227.4 33%
23  Philippines 193.2 9%
24  Algeria 173.6 3%
25  Thailand 152.4 4%
26  Kazakhstan 143.7 23%
27  Singapore 127.4 2%
28  Sweden 125.7 7%
29  South Africa 125.1 10%
30  Mexico 123.1 3%
31  Libya 116.6 4%
32 BIS-logo.PNG Bank for International Settlements 115.0 N.A.
33  Greece 112.2 75%
34  South Korea 104.4 1%
35  Romania 103.7 8%
36  Poland 102.9 4%
37  Australia 79.9 6%
38  Kuwait 79.0 9%
39  Indonesia 78.1 3%
40  Egypt 75.6 16%
41 Brazil Federative Republic of Brazil 67.0 1.0%
42 Denmark Kingdom of Denmark 66.5 3.5%
43 Pakistan Islamic Republic of Pakistan 64.4 27.4%
44 Argentina Argentine Republic 61.7 7.2%
45 Belarus Republic of Belarus 49.4 24.5%
46 Finland Republic of Finland 49.1 21.3%
47 Bolivia Plurinational State of Bolivia 42.3 13.6%
48 Bulgaria Republic of Bulgaria 40.0 9.3%
49 West African Economic and Monetary Union 36.5 12.0%
50 Malaysia Malaysia 36.4 1.2%
51 Ukraine Ukraine 36.4 6.7%
52 Peru Republic of Peru 34.7 2.3%
53 Slovakia Slovakia 31.8 64.7%
54 Nepal Nepal 30.1 22.9%
55 Iraq Republic of Iraq 29.8 2.0%
56 Ecuador Republic of Ecuador 26.3 28.1%
57 Syria Syrian Arab Republic 25.8 6.5%
58 Morocco Kingdom of Morocco 22.0 5.7%
59 Afghanistan Islamic Republic of Afghanistan 21.9 13.8%
60 Nigeria Federal Republic of Nigeria 21.4 2.0%
61 Sri Lanka Democratic Socialist Republic of Sri Lanka 16.6 11.2%
62 Serbia Republic of Serbia 16.6 4.8%
63 Jordan Hashemite Kingdom of Jordan 14.2 5.5%
64 Cyprus Republic of Cyprus 13.9 65.8%
65 Bangladesh People’s Republic of Bangladesh 13.5 4.2%
66 Cambodia Kingdom of Cambodia 12.4 11.1%
67 Qatar State of Qatar 12.4 1.4%
68 Czech Republic Czech Republic 11.0 1.1%
69 Colombia Republic of Colombia 10.4 1.2%
70 Laos Lao People’s Democratic Republic 8.9 34.4%
71 Ghana Republic of Ghana 8.7 7.1%
72 Paraguay Republic of Paraguay 8.7 6.2%
73 Latvia Republic of Latvia 7.7 4.6%
74 Myanmar Republic of the Union of Myanmar 7.3 4.4%
75 El Salvador Republic of El Salvador 7.3 10.6%
76 Guatemala Republic of Guatemala 6.9 4.3%
77 Republic of Macedonia Republic of Macedonia 6.8 11.1%
78 Tunisia Tunisian Republic 6.7 4.4%
79 Tajikistan Republic of Tajikistan 6.4 51.1%
80 Azerbaijan Republic of Azerbaijan 6.0 2.0%
81 Republic of Ireland Ireland 6.0 16.6%
82 Lithuania Republic of Lithuania 5.8 3.5%
83 Mongolia Mongolia 5.8 7.4%
84 Bahrain Kingdom of Bahrain 4.7 3.7%
85 Brunei Nation of Brunei, the Abode of Peace 4.0 4.9%
86 Mauritius Republic of Mauritius 3.9 5.2%
87 Mozambique Republic of Mozambique 3.7 6.6%
88 Kyrgyzstan Kyrgyz Republic 3.3 7.1%
89 Canada Canada 3.2 0.2%
90 Slovenia Republic of Slovenia 3.2 18.5%
91 Aruba Aruba 3.1 18.5%
92 Hungary Hungary 3.1 0.3%
93 Bosnia and Herzegovina Bosnia and Herzegovina 3.0 3.1%
94 Luxembourg Grand Duchy of Luxembourg 2.2 10.7%
95 Hong Kong Hong Kong Special Administrative Region 2.1 0.0%
96 Iceland Republic of Iceland 2.0 2.2%
97 Papua New Guinea Independent State of Papua New Guinea 2.0 2.3%
98 Trinidad and Tobago Republic of Trinidad and Tobago 1.9 0.9%
99 Albania Republic of Albania 1.6 2.8%
100 Yemen Republic of Yemen 1.6 1.2%
  Sum 31,320.4 Excludes G6 figure as countries separately listed

Privately held gold

As of October 2009, gold exchange-traded funds held 1,750 tonnes of gold for private and institutional investors.

Privately held gold (May 2011)
Rank Name Type Gold (Tonnes)
1 SPDR Gold Shares ETF 1,239
2 ETF Securities Gold Funds ETF 259.79
3 ZKB Physical Gold ETF 195.53
4 COMEX Gold Trust ETF 137.61
5 Julius Baer Physical Gold Fund ETF 93.50
6 Central Fund of Canada CEF 52.71
7 NewGold ETF ETF 47.75
8 Sprott Physical Gold Trust CEF 32.27
9 ETFS Physical Swiss Gold Shares ETF 27.97
10 Bullionvault Bailment 37.1
11 Central GoldTrust CEF 18.81
12 GoldMoney Bailment 19.55

World gold holdings

World gold holdings (2008) (Source: World Gold Council)
Holding Percentage
Jewellery 52%
Central banks 18%
Investment (bars, coins) 16%
Industrial 12%
Unaccounted 2%

 

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