China Mineral Company predicts that the rising prices of gold will continue to soar higher as Chinese people continue to invest in gold. China remains the world’s biggest producer of gold, and in the first half of this year, Chinese consumption of the precious metal also became the highest in the world, overtaking India.
Tad Brooks of the China Mineral Company said Chinese gold purchases for investment reached a record high of 70 metric tons in 2008. In terms of investment, purchases are rising, as more people are using gold as a hedging tool. Brooks said China’s gold investors had already climbed on the bandwagon and, in the absence of attractive alternatives, were reluctant to jump off. Further price support was likely to come from the Chinese government, which is expected to increase its gold reserves in the near future, Brooks added.
Currency devaluations, dramatic cuts in interest rates and the threat of inflation have made gold one of the few attractions left in China, where investors have fewer options. “If you look at the stock market in the last few months, there has been a lot of volatility and this has caused people to look for something more stable. People know that they can expect continuous growth in gold.” Brooks explained
