China's Rebalancing Should Be Good for Gold Demand

By: Ben Traynor | Thu, Feb 9, 2012

The next stage of China's development could give gold buyers a boost...
There is an old saying: "Nobody rings a bell at the top or bottom of a market."
Having said that, anyone reading about the stampede for gold during last month's Chinese New Year celebrations might have heard a faint ringing in their ears.
Here are a few quotations from various press sources:

• "Some customers just walk in and buy a bunch of 100g gold bars all at once...Companies come in too to buy gold bars for presents." -branch manager, Industrial and Commercial Bank of China.
• "Some companies are giving out gold instead of cash to their employees" -Jia Zhihong, jeweler, Wuhan.
• "With customers crowding and rushing in, we did not even have time to eat and drink." - gold counter sales clerk.
• "People seem crazy about gold, snatching it up more like a cheap cabbage than such a precious metal...You have to quickly decide whether to make a purchase, or it will be taken away by others." - Beijing shopper
• "Think of it like investing in the stock market...Gold maintains its value much better than stocks." - sales clerk, China Gold store.

The classic signs of an investment mania are there. Mass participation, frenzied buying, an established narrative that something is a 'sure thing'. But though this may look like the-mania-before-the-crash, that doesn't mean it is.

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