Despite reports like today's of Chinese gold consumption rising 7.8% YoY, its love of gold, which accounts for one fifth of global investment demand, is predicted to fall in the long term, as the country moves to free the yuan, thereby enabling savers to gain direct access to foreign stocks or bonds. The report also notes that China's central bank has been buying up US Treasuries at a rate of $US1.10 billion per month, and will continue doing so until it reaches US$100 billion.
Despite reports like today's of Chinese gold consumption rising 7.8% YoY, its love of gold, which accounts for one fifth of global investment demand, is predicted to fall in the long term, as the country moves to free the yuan, thereby enabling savers to gain direct access to foreign stocks or bonds. Freer capital flows will eventually mean freedom of movement of cash, and by implication, freedom of movement of gold.