Chinese Gold Consumption, and What That Means for Your Investment Portfolio

As the Chinese economy continues to grow, so does the expansion of the Chinese middle class. This pattern is a natural progression, beginning with economic growth and income expansion and culminating in new disposable income for citizens to spend on higher-end commodities. The Chinese are purchasing larger homes with better amenities and driving more luxurious cars. What China’s growing middle class is doing, however, is also spending a good portion of their newly acquired income on gold and gold coins.

Over the last decade, China’s GDP has nearly tripled, and their demand for gold has as well. With their newfound economic growth and their high savings rate, the Chinese have wisely turned to gold to be one of their primary investment safe havens. Although China’s per-capita gold consumption is one of the lowest in the world, which is the total amount of gold in the country divided by the population, their aggregate consumption of gold is repeatedly in the top five worldwide. This discrepancy can be attributed to the massive population that China has; after all, the size of its middle class alone is as large as the entire population of the United States.

Many experts predict that Chinese gold consumption could double within the decade, undoubtedly driving up the price of gold to record numbers. In the last year alone, the value of gold and world gold coins has increased by more than 25% and in the last 10 years it has increased by over 300%. This should come as a powerful indicator of the long-term return potential of gold, as China produces more gold than any other country yet is already consuming roughly 10% over what it produces at its current domestic supply. Not only will prices drive up higher, but an even greater proportion of the world’s production of gold will have to be channeled towards China to keep up with the country’s growing demand.

Why wait until prices rise another 100%? Call United Gold Group at 1-800-615-1513 today, and ask one of our Senior Account Executives to help you get on the path to diversifying your investment portfolio, getting started on gold investment, and protecting your assets for the future.