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Unbridled Love Of Gold In The East


‘Fear’ has been described as the chief driver of gold in the West. When all is gloom and doom in business and the economy, we look towards gold as a safe haven.

In the emerging economies of the East, ‘love’ is said to be the compelling factor. People have an affection for gold bordering on fanaticism – and it’s not limited to sophisticated investors.

There’s been a deep cultural affinity with gold in India and China for generations. It’s viewed as sacred, a symbol of purity, prosperity and good fortune. This can clearly be seen during major celebrations such as the Diwali Festival of Lights and the wedding season in India, and the New Year and National Day Golden Weeks in China.

Gold in the form of jewellery is a particular obsession in both countries where buyers believe that as well as being an essential adornment, it is also a sound investment.

Did you know that over 10 million weddings take place in India annually? It’s been calculated that between 30 to 50% of wedding expenses are gold.

China’s passion for gold is now being spurred by the growth of its middle-class, forecast to reach 500 million in the next 10 years. That’s in a country that already has more than 1 million millionaires!.

Is it any wonder that these two nations vie with each other as the world’s largest consumers of gold?

Whereas retail investors in the West tend to purchase gold when the price is rising, Eastern buyers are perhaps more canny, buying when prices correct. So don’t be surprised if the global flow of gold from west to east continues strongly now that prices have retreated from recent highs.

More on this topic: Gold price set to soar in 'Asian century'

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