China's Insatiable Hunger For Gold
Sprout Money

China is the biggest consumer of gold in the world at the moment and the hunger for gold of the Chinese is seemingly insatiable. China keeps buying gold in bulk and is also selling US government bonds. For some market watchers this is a sign that Beijing does not have faith in the dollar anymore.

India bought 97 tons of gold in 2013 and according to official stats China supposedly bought 1,066 tons. That is only the tip of the iceberg, however, because who knows how much gold is in the vaults of the Chinese central bank. The People's Bank of China is not very forward about these figures, ultimately.

In the future the Chinese will extend their lead with regards to the amount of gold being bought, since the regulation in India is pretty strict despite the recent changes. In contrast, China approved a lot of 'gold trading products' recently and gave banks more freedom to sell gold.

Marcus Grubb, managing director of investment strategy at the World Gold Council, feels that India is behind on China with regards to gold trading regulation and legislation. This means that India cannot fully meet the gold demands, although they are trying to make things easier for the parties involved.

China is already preparing for another surge in gold purchases from its inhabitants. More and more storage space and vaults are being built and one of them can supposedly hold no less than 2,000 tons of gold. That is twice the total consumption of gold of in the entire country last year.

Some market watchers are expecting the Chinese also to take up large stakes in the gold mining sector, which is actually a trend that is already visible. China is already the biggest gold producer in the world, but it will only strengthen its grip on the gold market by participating in foreign gold mines.

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