Forum Karczmy Bezdennego Kufla

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Although being the largest gold producer in the world, China does not seem interested to sell its amount of precious metal abroad. It would rather keep it for [link widoczny dla zalogowanych] itself, investing heavily in it. Only last year, for instance, it bought 454.1 tons of gold from [link widoczny dla zalogowanych] its internal production. This accounts for China ranking the sixth among the largest gold bullion owners across the world.
The explanation lies of course in the as huge domestic demand. Only the demand for gold bullion bars increased by a significant 44%, the Chinese investors perceiving gold products as more reliable than currency, in terms of [link widoczny dla zalogowanych] gain. But if the national demand represents an impressive 18.7% of the international demand, this is also because of normal citizens (1.3 billion - to be exact!) that are great gold consumers. The WGC forecasts a double consumption in this country over [link widoczny dla zalogowanych] the next decade. Still, both retail investors and private households are only the tip of the iceberg. In fact the greatest gold investor is the government itself.
Faced with the poor international economic situation and with its particular needs in the context, the Chinese government invests heavily in [link widoczny dla zalogowanych] gold as both a long-term and a short-term solution. On the [link widoczny dla zalogowanych] one hand, it is highly exposed to the American dollar because it has got a lot of dollars as the 'banker' of the huge American debt, by hoarding a large number [link widoczny dla zalogowanych] of that country's governmental bonds. On the other hand, as a massive trader to the same country, it has to do something with its trade surplus as well.
As to why choosing gold, that's easy to answer. [link widoczny dla zalogowanych] If you expect currencies to weaken, especially the dollar (and the huge US debt makes that more than likely), you turn to gold. Both people and [link widoczny dla zalogowanych] governments seem to do that in times of crisis. If indexing the gold price to the one in 1900, you will notice that its value hasn't changed much, [link widoczny dla zalogowanych] unlike of any other currencies.
Under these circumstances, China invests in a stable [link widoczny dla zalogowanych] asset, 'grown' cheaply enough at home. While by doing this, it may substantially contribute to the increase in the [link widoczny dla zalogowanych] gold demand [link widoczny dla zalogowanych] and price, [link widoczny dla zalogowanych] by hoarding likely to devalue currency it could collapse, remaining [link widoczny dla zalogowanych] without a financial safety net. What would you choose?