Why are the Chinese buying gold now?
Posted by Adam King on November 11, 2011
Why is China Buying Gold Mines?
November 11, 2011 – The Chinese people are known for their shrewdness when it comes to investing. In these days and times, the rest of the world pays a lot of attention to China to understand market trends and how to capitalize on the future. After all, a country with a fifty year plan has a pretty good look out into how things will shape up.
So the big news of recent is China’s first acquisition of an overseas gold mine. The Chinese government has been pushing precious metals ownership on its people for over a year now, but the purchase of a gold mine signals a braver new venture out into the market.
China only owns two gold mines on the mainland, one in Inner Mongolia and one in Tibet. Together these mines produced 55,259 ounces of bullion in the first half. The firm that owns the mines was renamed China Gold International Resources in 2008 when China National Gold bough 42 per cent stake in the company. Those who watch China from abroad, which should be everyone, are particularly interested in the megalithic country’s interest in strategic minerals. The purchase of a gold mine is red flag.
Further, Chinese investment abroad is an extraordinarily well-thought out process. Whatever the Chinese do, they do with an outlook unmatched by most industrialized economies. The reasons for this are multitude, but for our purposes we can understand it simply. It is not an easy thing to hold foreign assets due to governmental regulations and when China makes a move it tends to do so with a multi-decade outlook on global ventures. A case in point is China’s heavy involvement in Africa, but that’s the subject of another article.
Gold investing is actually a part of the centuries old Chinese culture and bears some consideration as China was also the first country to institute a paper currency. Why are the Chinese buying gold now? Good question.
The gold market will not reflect a change in price instantly based on this development, of course, but it is very reassuring to the gold investor who is thinking into the future and the gold investor who is looking to get in now.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
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US Gold Market
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