Wednesday, April 24, 2019

China aggressively promoting gold to citizens

China has been promoting the ownership of Silver and Gold to it's Citizens since September 2009. The main state-owned television company, China's Central Television, has been running news programme informing the public know how easy it is to buy precious metals as an investment.  On silver investment, the announcer is quoted as saying "China has introduced its first ever investment opportunity for silver bullion. The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%. Figures show that gold was fifty times more expensive than silver in 2007, but now that figure has reached over seventy times. Analysts say that silver has been undervalued in recent years. They add that the metal is the right investment for individual investors and could be a good way to cash in."

Prior year 2002, the private ownership of gold was prohibited in China but since early 2009, the Chinese government has been promoting the accumulation of gold by its citizens, presumably to help the nation diversify away from a devaluing dollar. Through China's Central Television, the main state-owned television company, running news programs and commercials encouraging it's citizens to purchase gold and silver as an investment. It can be easily purchased because every bank sells gold and silver bullion bars in four different sizes to individuals. Some of the Mining companies are reportedly encouraging employees to convert some of their wages to gold on payday.

“Simply put, the Chinese government is trying to trigger a national gold craze…and it’s working. The Chinese public now has gold trading platforms on steroids,” Paul Atherly, managing director at Leyshon Resources Ltd. (OTC ADR: LYRSY), said in an investor presentation in London.

Physical gold demand from private Chinese households rose 9% in the first half of this year, due to an “unprecedented” sales push across rural China, according to Gerry Chen, the World Gold Council’s local business development manager.

China’s Cheng Siwei, former vice chairman of the Standing Committee of the Chinese Communist Party, recently told Great Britain’s Telegraph newspaper that “If [the Fed] keep[s] printing money to buy bonds, it will lead to inflation, and after a year or two, the dollar will fall hard. Most of our [Chinese] foreign reserves are in U.S. bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen and other currencies.”

It is interesting to note that for the past 50 years, the Chinese government has controlled the distribution of all types of gold. They dictated prices and forbade citizens from owning or trading any type of precious metal. Anyone in possession of gold were thrown in jail.

Then in September 2009, the government started encouraging Silver and Gold investment to every citizens. Locals can buy silver bullion or gold bars at any Chinese bank in four different sizes. Wealth management products tied to gold are skyrocketing in popularity, and the public can now instantly buy, sell, and trade gold 24 hours a day in five different forms with different eight types of services.

Leyshon Resources managing director, Paul Atherley, in an investor presentation in London, commented that some employees at the company's gold mining project in northern China would, on pay day, would go to the local bank and buy a small gold bar as an investment and wealth protector. It seemed that the Chinese are being converted from being the lowest per capital gold consumers in the world to a nation of small precious metals investors.

At this rate, Chinese consumption of gold is likely to exceed that of India, which has been for years the world's biggest gold market. This buying of gold is only in its earliest stages. Apparently, the Chinese government is trying to trigger a national gold craze and it seemed to be working.

Is there a hidden agenda?

Why the sudden "change of heart"

Take Silver for example.

The global annual mine production for silver stands at 860 million ounces. Population of China is 1.3 Billion. Even if half, 650 million, were to buy a minimum of one ounce every month, that is enough to cause a price increase. If the Chinese citizens are indeed beginning to buy gold and silver, then this has to be a strong indication that prices are going to rise dramatically in the relatively near future. If this momentum picks up, the smallest percentage increase in Chinese investor demand will dramatically affect the global demand and commodity prices. China is the only country in the world now that promotes gold and silver to their citizens.