Thursday, February 1, 2018

Russia remains the world's largest gold buyer while China continues to have the world's largest gold markets

For precious metal investors it has to be confusing why the United States and London continue to be allowed to determine the price of precious metals, since these markets deal primarily in paper contracts versus that of physical bullion.  But for the time being the Daily London gold fix remains the arbiter of setting the price of gold while the U.S. Comex supports this through their futures spot price.

Yet what is perhaps the most interesting in this dichotomy of course is that neither the U.S. nor Britain are designated as either the world's largest buyers of gold, or the largest consumers, as those designations are relegated to both Russia and China respectively.

World's largest buyer of gold: Russia
Russia is the largest gold buyer in the world, and purchases by Russian banks have increased substantially in recent years. 
Last year, Russian banks bought 205,155 tons of gold, which is 4.7 percent more than in 2016 (195.89 tons), and approximately 67 percent of all gold produced in Russia. This is also a 13 percent increase compared to 2013. 
According to the World Gold Council, the Russian Central Bank increased gold reserves by 163 tons, to 1,778 tons. Russia has almost caught up with China, which holds the fifth biggest gold reserves of 1,842 tons. 
Russia is the world’s largest gold buyer, and the third-largest producer. Reserve diversification is one of the primary reasons driving Russia to buy gold, according to the Central Bank. - Russia Today
World's largest gold market: China
Demand for gold in mainland China returned to growth last year thanks largely to a growing appetite for jewellery, particularly in less affluent cities, new figures show. 
Consumption of the precious metal climbed 9.4 per cent to 1,089 tonnes, according to data from the China Gold Association, released on Thursday. That represents a big turnaround from a 6.7 per cent slump in demand in 2016, and means China maintains its crown as the world’s largest gold market for a fifth consecutive year. 
India, in second place, probably saw its gold consumption drop to an eight-year low of 650 tonnes, according to the latest estimate from the World Gold Council in November. 
Demand for jewellery in China was especially strong, rising 10.4 per cent to 696.5 tonnes, a dramatic recovery from the 19 per cent drop seen a year earlier, said the Beijing-based association. Jewellery demand is the largest contributor to the total appetite for the yellow metal in the mainland. 
In 2017, appetite for gold jewellery was particularly robust in lower-tier cities as China’s newly accumulated wealth gradually spreads from affluent coastal areas to less developed regions, according to Zhang Yongtao, deputy chairman of the association.
“Gold demand could remain resilient this year – there are early signs the growth trend will continue,” he added. 
Demand for bullion increased by 7.3 per cent to 276.4 tonnes, suggesting its allure as an investment option increased as the government tightened restrictions on property investments and capital outflows. - South China Morning Post


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