Gold Demand in India and China Review

[Image Source: Goldworld.com]

Gold Demand in India and China Review

India is the largest consumer of gold in the world. It consumes almost 600-700 tonnes of gold every year. And you won’t believe this but 95% of this gold is in the hands of the Individuals and not the government.

So you can imagine that how rich India is. Recently China also started buying more and more gold. This is because it is loosing faith on the US Dollars and treasury securities. As the US Government is printing money like hell out of thin air only.

According to World Gold Council (WGC), This demand for gold is increasing 12% year on year.

The demand for Gold Exchange traded funds has also rise sharply. People in India, China and all around the world are losing the faith over the dollar. Previously governments from all around the world are used to keep dollar as a reserve currency and preserve the value of their money.

But now they are preferring Gold over the dollar. This is because the gold has direct correlation with the US Monetary base (Money Supply).

In India,

Jewellery buying climbed 8 per cent to 529.8 tonnes in the last quarter, accounting for 57 per cent of total demand. In the second quarter jewellery buying accounted for just 40 per cent of overall consumption.
India bought nearly 50 tonnes, or 36 per cent, more gold jewellery in the third quarter than in the same period of the previous year, bringing its jewellery consumption in the quarter to 184.5 tonnes.

Thus, the demand of gold is rising year after year. Retail Investors of India are preferring gold over any other asset class (Stocks, Bank FDs & Mutual Funds). And in India, since centuries there was a huge demand for gold.

Indians love to buy and own gold in all forms. Gold beats the inflation very well and preserve the purchasing power of your wealth. So invest in Gold. However, I personally advise people to invest not more than 10% of your total portfolio net worth in gold.

[NOTE: I personally don’t invest more than 5% in gold because we don’t have any proper valuation method for this asset class as well as the gold is the non-income producing asset class. So I would rather prefer to own a $ 1 Million Business rather than $ 1 Million value of gold. Because a Business can provide you a cashflow.]