Click here to close now.




















Welcome!

News Feed Item

New Report Predicts Sustained Strong Gold Demand In China In Next Four Years

NEW YORK, April 15, 2014 /PRNewswire/ -- A major report published today by the World Gold Council "China's gold market: progress and prospects" suggests that private sector demand for gold in China is set to increase from the current level of 1,132 tonnes(t)1 per year to at least 1,350t by 20172. Following the record level of Chinese demand in 2013, which saw the country become the world's largest gold market, the report suggests that while 2014 is likely to see consolidation, the succeeding years are likely to see sustained growth.

The report examines the factors that have driven China's rise to become the number one producer and consumer of gold since the market began liberalising in the late 1990s. It also highlights why despite this steep growth in demand, the market will continue to expand, irrespective of short term blips in the economy.

The next six years will see China's middle class grow by over 60%, or 200m people, to a total of 500 million. Comparing this to the total population of the US, which stands at 319m, puts the size of this new market of affluent consumers, with the propensity to buy gold, in perspective.

In addition to these newly emerging middle classes, rising real incomes, a deepening pool of private savings and rapid urbanisation across China suggest that the 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 inhabitants3 - 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.

Follow the World Gold Council @GOLDCOUNCIL and download the full report at http://www.gold.org/supply-and-demand/china-report

For further information please contact:

James Murray

World Gold Council

T   +44 (0) 207 826 4754

M  +44 (0) 7834524069

E   [email protected]

Rose Beynon

Edelman

T   +44 (0) 203 047 2149

M  +44 (0) 7870 907 596

E   [email protected]

Notes to Editors

Methodology

The World Gold Council commissioned Precious Metals Insights (PMI) to lead the research into the outlook for Chinese gold demand over the medium term (defined as 2014-2017 for the purpose of this report) and to compose this report that details its findings.  Philip Klapwijk, founder and Managing Director of PMI, is a veteran of the gold market, with a wealth of experience through his time as Executive Chairman of GFMS and Head of Global Metals Analytics at Thomson Reuters GFMS. The research is a synthesis of his intimate knowledge of the Chinese gold market and the World Gold Council's expertise.

This was complemented by a series of in-depth interviews PMI and the World Gold Council jointly undertook with a number of key gold market participants in Shenzhen, Shanghai and Beijing. In addition, the report draws upon the extensive consumer research the World Gold Council has undertaken over recent years. This includes:

  • A comprehensive usage and attitudes study of over 10,000 Chinese consumers' relationship with gold jewellery undertaken in 2011 (TNS).
  • A piece of regular research from May 2013 to March 2014 with a series of waves asking Chinese consumers about their outlook for gold prices and intentions to buy gold jewellery over the next 12 months (Kadence).
  • A snapshot of 1,000 Chinese consumers to understand what motivates them to buy gold jewellery and bullion (TNS).

The collective knowledge of PMI and the World Gold Council, combined with extensive consumer research and industry expertise, has resulted in a detailed and insightful piece of analysis.

Key Forecast Assumptions

The forecasts for jewellery consumption and investment demand prepared for this report by PMI are based on several key assumptions:

  • Chinese GDP growth slows to an annual average rate of 6% between 2014-17. As the Chinese economy becomes larger and more mature its natural rate of growth will decline. Since 2009 the most important source of growth has been credit-driven fixed investment. This has become a less efficient means of generating additional gains in GDP. The transition towards an economic model where consumption plays a greater role in GDP is likely to result in lower GDP growth rates.
  • Private consumption is forecast to grow at an average 7.5% per annum over 2014-17. The gradual shift towards a more consumption driven economic model will require the rate of private consumption growth to exceed that for overall GDP. Growth in private consumption will be constrained by an only slow decline in China's exceptionally high household savings rate.
  • The probability of a financial crisis occurring over the medium term is considered high and growing. This risk stems from over-rapid credit growth and significant 'malinvestment'. A financial crisis is forecast to lower both GDP and private consumption growth over the 2014-17 period. (The precise timing and impact in any one year is impossible to forecast and so a loss of 2% of GDP is averaged out over the four years in question.)
  • Inflation is expected to remain under control (below 5%) over the medium term but inflation expectations could well grow because of the massive monetary easing that would almost certainly be undertaken in the wake of a financial crisis occurring in China.
  • No major change to the RMB exchange rate is forecast over the medium term. A modest appreciation is expected in 2014 but in 2015-17 there could be a shift to a moderate depreciation. This can be expected because (initially) there may be a period of general US dollar appreciation. In addition, a financial crisis may impact the renminbi negatively. The authorities could also use currency depreciation as a means of softening the blow from such a crisis, as this would assist the export sector.
  • PMI's gold price assumption for this forecast is that 2014 sees a generally 'weak' trend. However, the expectation is that during the following three years gold prices will tend to recover, reaching an annual average of around US$ 1,500 in 2017.

World Gold Council
The World Gold Council is the market development organisation for the gold industry. Working within the investment, jewellery and technology sectors, as well as engaging in government affairs, our purpose is to provide industry leadership, whilst stimulating and sustaining demand for gold.

We develop gold-backed solutions, services and markets, based on true market insight. As a result, we create structural shifts in demand for gold across key market sectors.

We provide insights into the international gold markets, helping people to better understand the wealth preservation qualities of gold and its role in meeting the social and environmental needs of society.

Based in the UK, with operations in India, the Far East, Europe and the US, the World Gold Council is an association whose members include the world's leading and most forward thinking gold mining companies.

1 Thomson Reuters GFMS. This compares with the China Gold Association's estimate of 1,176.4t.
2 Precious Metals Insights
3 National Bureau of Statistics
4 Precious Metals Insights estimate based upon Thomson Reuters GFMS data

SOURCE World Gold Council

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Skeuomorphism usually means retaining existing design cues in something new that doesn’t actually need them. However, the concept of skeuomorphism can be thought of as relating more broadly to applying existing patterns to new technologies that, in fact, cry out for new approaches. In his session at DevOps Summit, Gordon Haff, Senior Cloud Strategy Marketing and Evangelism Manager at Red Hat, discussed why containers should be paired with new architectural practices such as microservices rathe...
U.S. companies are desperately trying to recruit and hire skilled software engineers and developers, but there is simply not enough quality talent to go around. Tiempo Development is a nearshore software development company. Our headquarters are in AZ, but we are a pioneer and leader in outsourcing to Mexico, based on our three software development centers there. We have a proven process and we are experts at providing our customers with powerful solutions. We transform ideas into reality.
Any Ops team trying to support a company in today’s cloud-connected world knows that a new way of thinking is required – one just as dramatic than the shift from Ops to DevOps. The diversity of modern operations requires teams to focus their impact on breadth vs. depth. In his session at DevOps Summit, Adam Serediuk, Director of Operations at xMatters, Inc., will discuss the strategic requirements of evolving from Ops to DevOps, and why modern Operations has begun leveraging the “NoOps” approa...
Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is designed for their business. In 2015, organizations such as United Airlines, Sony...
Puppet Labs has announced the next major update to its flagship product: Puppet Enterprise 2015.2. This release includes new features providing DevOps teams with clarity, simplicity and additional management capabilities, including an all-new user interface, an interactive graph for visualizing infrastructure code, a new unified agent and broader infrastructure support.
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Red Hat is investing in Tesora, the number one contributor to OpenStack Trove Database as a Service (DBaaS) also ranked among the top 20 companies contributing to OpenStack overall. Tesora, the company bringing OpenStack Trove Database as a Service (DBaaS) to the enterprise, has announced that Red Hat and others have invested in the company as a part of Tesora's latest funding round. The funding agreement expands on the ongoing collaboration between Tesora and Red Hat, which dates back to Febr...
As more and more data is generated from a variety of connected devices, the need to get insights from this data and predict future behavior and trends is increasingly essential for businesses. Real-time stream processing is needed in a variety of different industries such as Manufacturing, Oil and Gas, Automobile, Finance, Online Retail, Smart Grids, and Healthcare. Azure Stream Analytics is a fully managed distributed stream computation service that provides low latency, scalable processing of ...
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
With the proliferation of connected devices underpinning new Internet of Things systems, Brandon Schulz, Director of Luxoft IoT – Retail, will be looking at the transformation of the retail customer experience in brick and mortar stores in his session at @ThingsExpo. Questions he will address include: Will beacons drop to the wayside like QR codes, or be a proximity-based profit driver? How will the customer experience change in stores of all types when everything can be instrumented and a...
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Trel...
Cloud and datacenter migration innovator AppZero has joined the Microsoft Enterprise Cloud Alliance Program. AppZero is a fast, flexible way to move Windows Server applications from any source machine – physical or virtual – to any destination server, in any cloud or datacenter, using its patented container technology. AppZero’s container is also called a Virtual Application Appliance (VAA). To facilitate Microsoft Azure onboarding, AppZero has two purpose-built offerings: AppZero SP for Azure,...
WSM International, the pioneer and leader in server migration services, has announced an agreement with WHOA.com, a leader in providing secure public, private and hybrid cloud computing services. Under terms of the agreement, WSM will provide migration services to WHOA.com customers to relocate some or all of their applications, digital assets, and other computing workloads to WHOA.com enterprise-class, secure cloud infrastructure. The migration services include detailed evaluation and planning...
SYS-CON Events announced today that G2G3 will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based on a collective appreciation for user experience, design, and technology, G2G3 is uniquely qualified and motivated to redefine how organizations and people engage in an increasingly digital world.