Why Are Chinese Investors Buying Up Gold Bars?

Chinese investors are buying gold bars at a torrid rate. China’s appetite helped drive global demand for physical gold up 9% in the first quarter of 2016. Chinese investors gobbled up 105.9 tons of gold in Q1. That represents a 30% year-on-year increase, and was the fourth strongest quarter on record.
So, why the strong demand for physical gold in China? Mao Mao, a gold dealer in downtown Shanghai, told the Australian Financial Review she sees three major factors pushing the Chinese gold rush – and they all relate to fear.

People are afraid of war, a falling yuan and slumping property prices,’ she said. ‘Buying gold bars as an investment is a good way to guard against risk.’
Perpetually low interest rates have also pushed investors into gold. Mao said many people don’t want to put their money in the bank, so they buy gold bars instead. The current Chinese base rates stands at 4.350%. While low by Chinese standards, it is significantly higher than interest rates in the US and Europe.

This post was published at Schiffgold on MAY 9, 2017.