News report of Chinese crowd buying gold

May 20th, 2010

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A few years, we advised one of our Chinese friends to buy gold. Back then, there was a craze among Chinese investors to invest in stocks (and mutual funds). Our friend queued up at the bank and asked to buy gold. The lady behind the bank counter then laughed at our friend.

?You want to invest in gold?? she asked, being amused. ?Nobody invest in gold!?

Fast forward to 2009.

The property bubble in China was powering ahead, after a brief disruption in 2008. Then in 2010, the Chinese government began to crack down hard on property speculation (see What if China crashes?). Hence, as we wrote before in Will a crashed Chinese property market lead to an embrace of gold? Part 2- Store-of-value function, it becomes very logical for the Chinese to move their speculation from property into gold.

Today, we see this news report (notice what one of the lady said about one property of gold that is not present in property):

As Paul, one of our readers said,

Any hint of softness in price will cause the Chinese to stop buying. Conversely, any hint that the price is set to rise, and they will rush in.

Once gold enters the mainstream imagination of the Chinese people, you can imagine what will happen to gold prices. This could be the beginning of the trend.

How to buy and invest in physical gold and silver bullion

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