asiaprop you seem to be in the know of Asia and China in particular. Mind if I ask you a question? Would you care to share the common view towards precious metals by the average Chinese? Thanks.
would you mind elaborating? I am asking because I believe the average Chinese is way too busy going about his/her daily business and punting local stock markets. Most Chinese (those who do not have illegal accounts set up in HK or elsewhere) are not even allowed to trade fx or precious metals at least not the listed precious metals that are traded in NY/LDN/TKY. So, unless I misunderstand where you try to get to I would say that the avg Chinese rather"gambles" (most gamble rather than trade) the broad market than any particular sector according to what they hear in the daily news.
Well, for instance India has a long tradition of preserving their earned savings by transfering them into gold and I just wondered if a same kind of culture excists in China. In the gold community China is always brought forward as a wildcard driving prices higher and indeed the Chinese government has doubled it's gold holdings over the last few years but I have no idea if there has been the same kind of appetite by the people themselves.
I would probably differentiate between the common people and the ambitions of the government in regards to the management of their reserves. As far as I know the average person is mostly invested in real estate and cash equity. The plans of the government is a completely different: I believe there is a reason why gold did not sell off a lot more since March 09 which is a shift by sovereign wealth funds into gold and other assets with the aim to reduce their holdings of US paper percentage wise relative to their other holdings. In that sense I do not think the average Chinese majorly participates in accumulating significant holdings in gold. The average community also saw Gold going to the moon last year and what happened at one point was that it was dumped despite the financial turmoil because of hedge fund redemptions. I find gold a very difficult asset to trade when relying soly on fundamentals.
There is about 1.3 billion Chinese ... I would discount most any 'common view' of the 'average' Chinese. That said, here's my answer: The overwhelming majority of Chinese do not have access to, nor would be comfortable with owning or trading metals derivatives. Their preference would be for the physical asset. That said, putting too much wealth in the form of physical metals creates risk of loss due to crime. Corruption is endemic, even at the state banks ... who would dare store valuables there? If we are talking about Chinese buying Gold today, I generally understand this to mean the diaspora populations of Hong Kong, Taiwan, Singapore, Malaysia, Indonesia, and Chinatowns all over the world. Many of these Chinese are wealthy and will hold gold in myriad forms. In order for us to see widespread gold buying by the mainland Chinese private sector, we'd need to see calamitous social upheaval - which historically has recurred in China on a fairly regular basis. During WWII and the early days of communist rule, one way those with money hid their assets was by buying gold. Currently China is liberalizing its capital markets. China's derivatives exchanges may even already offer metals contracts (I believe they do.) As these reforms continue to progress - mainland Chinese will have greater flexibility to hold different assets, safely, including gold.