Investment in gold is still warming up

Affected by the continuous weakening of the US dollar, the gold price on the first exchange day or the last exchange day of July on China's market continued rising. On July 31st the prices of all the items on Shanghai Gold Exchange changed to a rising trend.

According to the analysis, after experiencing several major slumps from spring to summer, more and more investors are eager to make some earnings from the gold market. At the same time banks present paper gold, physical gold and financial goods connected with gold one after another. Gold has provided a new channel for investment following stocks, foreign exchange, futures and real estate.

The information informed from the China Gold Summit concurrently the first "high-level forum on innovation and development of Chinese western gold industry" shows that the domestic consumption of gold totaled 213.2 tons last year, ranking the fourth after India, the United States and Saudi Arabia and kept a relatively stable growth level. While in the regards to output, China hit a record high of 220.5 tons last year, with an output value amounting to 39.5 billion yuan, which makes China the world's fourth largest gold producer preceded by South Africa, the United States and Australia.

However, because the gold exchange on domestic market still lies in the initial stages, the exchange volume of gold is still small. The steady growth of consumption and output of gold shall be owed to the increasing heating of jewelry consuming market.

The time of gold market settling in China is not long; not until July of 2005 did the Shanghai Gold Exchange begin to open formally to the public, without offering service of option transaction. Now there are mainly two parts for the investment in gold. One is physical gold, the gold bar, yellow boy and golden jewelry included. The other is paper gold; by owning a piece of warrant instead of physical gold one can attain proceeds with the rise and fall of gold prices.

While most consumers buy gold jewelry either for the sake of dressing up or presenting gifts, few take investment returns into consideration. Though some of the customers have the intention of making some investment, they are still looking on but do not take actions.

The latest statistics issued by the World Gold Council demonstrates that at present the consumption volume per capital in China is only about 0.2 grams, far below the level of 10 grams per capital in other nations and regions in Asia. Furthermore the investment proportion is even less.

From middle May, the gold spot price, after having successive surges, has fallen back to around US$ 640 from US$ 730 per ounce, but the average weekly price saw no big slumps. The analysts view that gold is still on a bull market and has no sign of weakening.

By People's Daily Online