Inflationary Cloud Has Silver Lining In China

Posted by admin on Saturday, July 16th, 2011

China is fast becoming the powerhouse of the world economy. But the Chinese economy is not without its own problems created by its success, and the more entrepreneurial outlook of its population. Economic growth in the country is slowing, but at an annualised rate of 9.7% is still outpacing that of its western counterparts. Such a rate of growth brings inflationary pressures, and in order to try to keep a cap on these the Chinese Government has raised interest rates four times in the last year.

Gold and silver are traditionally safe haven investments in times of inflation, and it is therefore no surprise that China continues to import both metals at a staggering rate. China’s asset managers, recently approved to raise $70 billion for overseas investment, are now seeking extra funding for precious metal investment. China’s major players are eyeing gold and silver as a means to protect their wealth in the current inflationary climate.

Against this backdrop, it is not surprising that gold and silver demand in China is expected to continue to increase in the foreseeable future.

Thus far, five companies have been approved (by the Chinese authorities) to raise cash for investment into precious metals products overseas. There are another twenty more applications waiting processing. Already, in the first quarter of this year, investment demand has more than doubled to 90.9 metric tons. The World Gold Council reported in May that China has now overtaken India as the largest market for gold coins and bars.

Precious metals watchers, however, forget India at their peril. The country’s state owned trading company, Minerals and Metals Trading Corporation, recently announced that it would import 350 tons of gold in 2011-12. With the announcement, it also stated that it would import over three times as much silver, 1200 tons, during the same period.

In India, silver prices have remained robust as strong demand and short supply in the global market has led to investor expectations of better returns in the longer term than offered by gold.

So two of the world’s fastest growing and most vigorous economies today are buying gold and silver in increasingly large amounts. Do they know something the rest of us don’t?

Calling All Collectors: The World of Money Fair

Organised by the American Numismatic Association, this annual event takes place this year in Chicago from August 16th to August 20th.

As ever, the event promises to be a popular occasion for mint and coin buffs, with the Museum Showcase a particular draw. Featured this year are collections from the Smithsonian Institute, Edward C. Rochette Money Museum, and the US Mint, amongst others.

One of the star exhibits is The Smithsonian Institution’s “Good as Gold: America’s Double Eagles” which explores the history of the U.S. $20 gold piece. The display includes the first (1849) and last (1933) double eagles ever produced, and a 1907 Saint-Gaudens ultra-high-relief $20 pattern coin that President Theodore Roosevelt gave his daughter Edith for Christmas that year.

For those wishing to see even further into the past the “Eid Mar” Denarius is one of the most historically significant of ancient coins, struck by Marcus Junius Brutus to commemorate the murder of Julius Caesar. The obverse has a portrait of Brutus while the reverse features a pileus (or freedom cap) between two daggers (representing Brutus and Cassius, the leaders of the assassins) with the inscription “EID MAR” (for the “Ides of March”) below. Brutus and Cassius are portrayed as saviours of the Roman Republic. It is displayed courtesy of Michael Gasvoda.

The Collector exhibits showcase the collections, creativity and research of ANA members. Almost every aspect of numismatics is featured in competitive and non-competitive categories.

For a more global aspect of money and mintage, visitors can walk the World Mint Promenade. Possibly the largest single collection of world mints anywhere, four continents of the world are represented and enthusiasts are afforded the opportunity to discover what’s new in the world of money and coin production. Those represented include the UK’s Royal Mint, the US Mint, and Australia’s Perth Mint.

And, of course, China Gold Inc. will be present. Perhaps a chance to find out what China is doing with some of those precious metal imports?

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