Data from the World Gold Council (WGC) on Thursday revealed record investment demand lifted global gold demand to an all-time high in 2011, with China and India generating 49% of demand. Those two countries also accounted for 55% of global jewellery demand for gold last year. “It is likely that China will emerge as the largest gold market in the world for the first time in 2012,” said Marcus Grubb, WGC’s Managing Director for Investment. Grubb also emphasized, “What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”
Staying with the WGC, The Financial Times reported that WGC believes China’s central bank made significant gold purchases in the final months of 2011, contributing to a surge in the country’s imports. WGC told the FT that buying by the People’s Bank of China (PBOC) could explain a large discrepancy between Chinese imports and the WGC’s estimates of consumer demand in the country. China’s imports soared to 227 tonnes in the last three months of 2011, while mine production in China came in at 100 tonnes in the quarter, implying total supply of at about 330 tonnes.
This number compares to demand of 191 tonnes for gold jewellery, bars and coins. Was the difference (~139 tonnes or 4.47 million ounces OR @$1,750/oz gold = $7.7 billion!) eaten up by China’s central bank? For comparison purposes, one Bay Street broker highlighted that last year, all the central banks of the world combined bought gold at a reported rate of only 110 tonnes per quarter.
Source: The World Gold Council
