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hugolp
03-02-2009, 11:18 AM
http://www.telegraph.co.uk/finance/financetopics/recession/china-economic-slowdown/4862739/Postcards-from-the-Edge-China-turns-to-gold-in-hard-times.html

Seen here : http://www.marketskeptics.com/2009/03/china-turns-to-gold-in-hard-times.html


Postcards from the Edge: China turns to gold in hard times
The world's shops may be empty and consumers nursing their savings at home but one product in China is bucking the trend: golden bulls.


By Richard Spencer in Beijing
Last Updated: 9:05AM GMT 02 Mar 2009
Golden Bull figure: China turns to gold in hard times
2009 is the Year of the Bull Photo: GETTY

Chinese savers alarmed at the economic crash and short of other safe investments for their money have headed to the gold markets.

The most popular item every spring is the animal associated with the Chinese new year, and 2009 is the Year of the Bull.

Beijing's gold markets are reporting record sales for the one thing that with currencies being devalued and governments taking on ever bigger debts seems sure to rise in value.

"Gold objects are a way of protecting the value of your savings," said Zhang Hong, a retired civil servant standing among the big crowds who are flocking during lunch-hour to Beijing's biggest gold market, Caishikou. "My family have quite a collection now."

Caishikou, in the south of the city, says it has had its best ever Spring Festival holiday – the national "golden week" holiday taken by all Chinese over the lunar new year.

The company's own-designed gold pieces had sales of 166 million yuan (£16.6 million) in the week's holiday, which ended earlier this month, a 31.4 per cent rise on last year.

Its total sales in January were more than 1 billion yuan (£100 million), again a 30 per cent rise on 2008.

"All kinds of 'Bull Year' decorations and gold bars are among the popular products," a spokeswoman said.

The two other major gold markets, on Wangfujing and Chang'an Avenue in the city centre, also saw Spring Festival week rises in sales, of 20 per cent and 49 per cent respectively.

Nationally, China is now the fastest growing market for gold, particularly since the start of the credit crunch. Last year, total sales rose by half, in dollar terms.

The buyers are hoping to profit from the gold price, currently rising in the expectation that stimulus packages being proposed by governments around the world will increase their indebtedness and weaken their currencies – usually a trigger for investors to pour into the "safe haven" of gold.

The markets are using this in different ways. In the United States, companies are urging people with debts and back mortgage payments owing to search their drawers for gold items to sell for cash.

Gold is currently trading at about £660 an ounce – up from £460 four months ago.

In China the attraction of gold is exacerbated by currency controls and a weak financial system which gives little other option for those who want to make a return on their cash. The stock market has risen and fallen like a roller-coaster in the last three years, while the mainland's property bubble has also burst.

Yet Chinese have huge savings and spend little in comparison to the indebted households of the west – an imbalance blamed by some for the credit crunch in the first place.

Mrs Zhang was bucking the trend in bulls, seeking to buy a golden cockerel for her son – it is his birth animal, and he is about to turn 40. She said she had a budget this time of 4,000 yuan (£400), but was looking to invest a total of 50-60,000 yuan in gold from her savings.

But Liu Hongying, 63, showed off a figurine of two bulls holding up the Chinese character "fu", meaning "prosperity", a traditional new year greeting. She had paid 8,000 yuan, again as a present for her son and daughter-in-law.

"Both my son and daughter-in-law are 'bulls' so I am hoping to send them 'fu'," she said. "We Chinese buy gold for two reasons – it's a present that sends a good message, and it is something that will go up in value not down, so it's much more worthwhile than other presents."


Hugo

DFF
03-02-2009, 11:29 AM
Interesting. Even more interesting is Gold itself - and Newmont Mining and Barrick Gold Corp - NOT exploding right now given the DOWs freefall.