New World Gold Council research identifies untapped potential.
- Total gold investment demand in China has grown in line with the country’s GDP and population during this period and the World Gold Council (WGC) expects this trend to continue going forward.
- Chinese consumption intensity lags behind other major markets substantially. If gold were consumed in China at the same per capita rate as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase to 4,000 tonnes in the jewellery sector alone.
- While China is the world’s sixth largest official holder of gold, its gold reserves currently account for less than 2 per cent of total reserves and, therefore, remain low by international standards. Even adding 10 percent from its current level would translate to an additional 100 tonnes of gold offtake.
- While gold demand is accelerating, the WGC expects Chinese supply growth to be challenging in the medium to long term and is likely to decline in the future.
- During the last decade, Chinese gold mining producers have stepped up gold production by 84 percent, however its known reserves account for just 4 percent of total known global gold reserves. Assuming these figures are correct, the WGC estimates suggest that China could exhaust its known gold mining reserves in six years from now.
- This supply trend is only likely to reverse if China, which is still relatively undiscovered in terms of global exploration budgets, were to attract significant capital investment for exploration.