Due to the latest phenomena in China, some experts are calling this the “Gold Era”.
The Chinese are buying gold in record numbers and the trend has been increasing exponentially within the past year as the race for wealth-guarding picks up pace.
It has been estimated that China purchased approximately 490 tons of gold in the 2011 year – double the estimated 245 tons purchased just one year earlier in 2010.
With stories of China's gold hoarding blowing up headlines around the world, people are beginning to ask: “Who's buying all the gold?”...and “Why are they buying in such massive quantities?”
Usual Suspect #1: The People's Bank of China (PBOC).
According to Zhang Jianhua from the PBOC. “No asset is safe now...The only choice to hedge risks is to hold hard currency—gold.” Jianhua also commented on it being a wise move to purchase the expensive yellow-metal on price dips.
After Mr. Jianhua made these statements, global analysts immediately assumed they meant that the fifth-largest holder of gold would be on the prowl for even more of the glistening precious metal. Hence, an easy explanation as to "who's buying all the gold."
However, others argue that there is little proof to support that theory. Perhaps most the most important thing to remember before jumping to conclusions is the simple fact that it'd be an extremely rare scenario that China's government would want to purposefully disclose their short-term investment strategies, at the risk of hurting itself.
Second, the central bank has less purchasing power these days. China’s foreign reserves declined in Q4 2011, falling $20.6 billion from Q3. The first quarterly outflow since 1998 was not large, but the trend was troubling. The reserves declined a stunning $92.7 billion in November and December.
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