China has a centuries-long cultural attraction to gold, but affordability has historically been an obstacle. However, rising incomes and accumulation of wealth are bound to result in Chinese citizens becoming bigger consumers of gold for jewelry or investment purposes.
The chart below, courtesy of U.S. Global Investors – Investor Alert, shows where China stands on a per-capita basis among countries with a traditionally high affinity for gold. China’s currently near the bottom of the list but the World Gold Council believes per-capita gold consumption by the Chinese could easily double in the next decade. This, naturally, could have a huge impact on the global supply-demand balance of gold bullion.
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Source: U.S. Global Investors – Investor Alert, April 23, 2010.