Demand for gold in China is surging despite slower economic growth.

Resource: http://money.cnn.com/2013/11/15/news/economy/china-gold/index.html?iid=SF_BN_River

According to CNN, the latest World Gold Council report claims “China Becomes World’s Top Gold Buyer”, by buying up 798 tonnes of the precious metal, relegating India, at 715 tonnes, into second place. The report predicts that China may surpass the 1000 tonnes mark by year’s end. The big increase in Chinese appetite for the yellow metal is due to the growth of the middle class and disposable incomes in China. A secondary reason for China’s push into the top spot is that the government of India has been restricting gold imports and raising taxes; thus lowering demand for gold by Indian consumers. The report repeated a common claim among financial advisors, that “gold is often seen by investors as a safe haven”, and points at the fact that the global market for the metal has been resilient, even though investors have fled from gold-backed exchange-traded funds. My personal take on buying gold as an investment is that, unlike stocks and bonds that allow you to gain extra value from passive income (interest and dividends), the only payback you can actually get from gold is if the price per ounce rises and you sell it before it drops again. The challenge with investing in precious metals is predicting which way the price will go after you buy it, and whether or not you can afford to hold onto it until its value reaches your target? Apparently, the government China feels confident that their time to buy is now. As the ancient Chinese proverb goes “An inch of time is an inch of gold but you can’t buy that inch of time with an inch of gold.”

Reference: Yan, Sophia. “China Becomes World’s Top Gold Consumer.” CNNMoney. Cable News Network, 15 Nov. 2013. Web. 18 Nov. 2013. <http://money.cnn.com/2013/11/15/news/economy/china-gold/index.html?iid=SF_BN_River>.