Market Insights

Why the Chinese Are Buying Gold

Gold Alliance disclaimer

The Chinese seem to be seeking a different investment strategy than Americans. Numbers from the World Gold Council show that, for Q1–Q3 2017, Chinese demand for physical gold increased to 233 mt (metric tons) compared to just 162 mt in 2016—an increase of almost 44%. On the other side of the world, Americans are ditching gold in favor of giving in to the cryptocurrency mania and contributing to the stock market bubble: Americans purchased 30 mt in Q1–Q3 2017 versus 66 mt in 2016, a decrease of 55%.

Interestingly, the Chinese Hang Seng Index jumped by 43% in 2016, outperforming the Dow Jones’ 30%, while the surging demand for gold saw the highest Chinese demand for gold in four years. If we include Indian demand, the two countries account for almost half of total global demand for gold.

The year 2018 will show whether the stock and cryptocurrency bubbles will burst. One thing Is certain: they will burst—the question is just when. The recent 10% correction, still have not shaken Americans’ blind trust that the Dow Jones will continue its rise for eternity, but all markets have to correct eventually. And the next correction may prove to be significant, leading to another financial crash. It looks like US stock investors will not be ready for the crash, because they are riding the wave about to crash. The Chinese will be ready.

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