2014-02-05

Chinese Aunties Dump Paper Gold For Real Gold They Can Wear and They Keep On Buying

Chinese aunties are 40 to 60 years old, with household worth of between 100,000 and 10 million yuan. They are selling off paper gold to buy the real thing, and their physical buying has morphed into jewelry and decorative pieces. This gold is less likely to flow back into the market because they are paying a premium of about 20-25% over the investment price (currently gold jewelry is about 300 yuan/gm versus a spot price of 244 yuan/gm) and because jewelry and decorative pieces have a much lower sale value. Unless they meet financial duress, they aren't going to make a return on their investment until gold goes through $2000 an ounce. The aunties are in for the long haul.

As I've said previously, if China has a major financial crisis, gold could take a hit from a combination of a drop in consumption and a stronger U.S. dollar, assuming a wider financial panic didn't send investors into gold (and even Chinese investors might choose gold over the yuan since a crisis would devalue the currency). On the flip side, assuming China doesn't experience a major crisis, I don't see how gold could sustain a drop to below $1100 as some technical traders (whose targets I take very seriously) have forecast because the aunties would unleash another massive buying wave.

Auntie buys ¥2 million in gold in one year, says no regrets: sooner or later the price will come back up
"Now the money" has become the most popular New Year with a New Year words between relatives. So, how to achieve the Horse "Now the money"? Stock and property markets, financial products, gold , and even so bitcoin financial options, which is more easily achieved "once the money"? Beijing Youth Daily reporter interviewed by a group of ordinary people in the past year rationale Finance calendar, tells the story of a group of Chinese-style financial management, in order to give the reader a horse fiscal year to provide reference.

Bargain hunters are all the essentials of investment, but investment in gold last year, it has experienced a "buying more low", "copy is not in the end" embarrassment. In the group of gold investors, the "Chinese Mother" has become the object of global attention.

Year invested more than 2 million yuan to buy gold

Although until now could not find a precise definition of "Chinese Mother", but there are scripts described "Chinese Mother": they are between the ages of 40 to 60 years old, household disposable cash in a few 100 thousand to 10 million yuan between financial knowledge approaches zero, the retail investment groups like the suit. This year 40-year-old aunt in the autumn of life certainly can not be considered Aunt ranks, but if she should be in accordance with the above definition fall into the ranks of the "Chinese Mother" because she was mad hunters last year to buy gold, buy three waves of orgasm in both the annual gold have her figure, a year down her gold assets invested over $ 2 million.

The first time was last April, when the domestic price of gold for the first time fell below 300 yuan / gram. Then she felt the timing should buy gold to. Because she had been doing paper gold financial products, gold rose sharply in recent years, making her gain a lot of money, but also makes her the gold price change is particularly sensitive. Gold fell below 300 yuan mark for many gold investors are quite sensitive, because the price of gold had been down 340 yuan. Paper gold investment people, many of them with the hope that the "paper" into real gold impulses, so when the price of gold dropped significantly, many people will choose to become a true gold paper: throw away the part of the paper gold that financial products, while buying the appropriate gold products. Had been to buy a variety of gold jewelry desire outbreak, she visited almost every day in the week gold shop for seven or eight people in the house is equipped with a full set of gold jewelry, the elderly have earrings, rings, necklaces themselves, and gave the child to buy the longevity lock. In addition, she also bought a 50 g investment in gold bullion.

Investment or consumption to see how you look

However, the gold price did not make some adjustments as before to continue to the upside, but continued to decline. 51 during the autumn and aunt with his family to Hong Kong tourism , the local lower gold buy gold again stimulate her enthusiasm. She said, "Hong Kong of HK $ quoted price of gold and gold shop mainland renminbi value offer almost all the same, but now more and more valuable yuan, and the Hong Kong dollar exchange rate is equivalent discount of twenty percent, of course, a bargain! "Autumn lady told reporters BYD In Hong Kong, gold shop jewelry styles more, and a lot of new models earlier than mainland-listed, so take along more and more goods back when gold went to the Hong Kong Tourism can even earn back the tolls. This time she was generous to buy gold and gold products will be dispersed family back home. "One is to buy gold in Hong Kong is really a good deal, but they're also hoping amortized cost, the cost to buy gold before pulling!" She recalls thinking.

But then all the way down the gold price trend more obvious, but it does not seem much of an impact aunt autumn mood. "In the end is to buy gold as an investment or a consumer, to see how you looked." She said she purchased mostly gold jewelry, wear make yourself feel good wearing it has made her very comfortable. Even a small amount of investment in gold bullion, placed in the home can serve as a kind of decoration, enjoy some leisure time is also very valuable.

Late last year, the annual gold consumption peak in the hottest autumn still aunt figure. Like many year-end habits at home, "Tim Golden," the people, she went to the store looking for a variety of gold zodiac gold items. "I have to buy an annual Lunar New Year gold bars, has now been saved for seven years, during which the price of gold up or Change glance." But she told reporters, when see these gold bars, gold price will not care what Guimai have some disadvantage . "Take the Snake bullion, is this the most expensive a few bars, Pima annuity of 100 yuan per gram should you, but then, are the price, and now you want to spend more money can not buy Snake bullion up! "So she insisted on their own experience of the past year to buy gold does not regret.

And autumn aunt convinced that sooner or later the price of gold to rise back. This year let her become more confident, since New Year's Day fell below the domestic price of gold 240 yuan / gram, the price of gold appears modest rebound, rising to nearly a month now, the minimum time from 235 yuan / gram up to 247 yuan / grams nearby.

Wall Street might really afraid, "Chinese Mother"

For the "Chinese Mother" last year's move to buy gold, as many people are a joke. However, the State Council Development Research Center, Institute for International Economics Visiting Researcher Zhang Jie believes technology: Wall Street could really afraid, "Chinese Mother." He said those on Wall Street who specialize in gold lease afraid, "Chinese Mother", they fear a "Chinese Mother" to buy back the gold to make gold jewelry worn around the neck.

"The Fed can put gold leased to others, who rented the gold later thrown out on the market, and then buy them back, such as gold prices fell back to the Fed." Zhang Jie explains, "but if these people rent out after the gold 'Chinese Mother' buy gold jewelry do become worn to the neck, those who want to buy can not buy back, so this is actually for Wall Street, those who specialize in leasing gold very afraid 'Chinese Mother'. "

BYD reporter learned that, last year, mainland China, Hong Kong is one of the consumer "gold rush" in the most important areas. BYD reporter recently obtained information from the Hong Kong Census and Statistics Department show that mainland China in 2013 hit a record high amount of gold imports from Hong Kong reached 1,108.8 tons, representing an increase of 33 percent in 2012.

Do not just laugh, "Chinese Mother" buy gold

"Chinese Mother" is nothing but a symbolic gold generous overseas Chinese mainland consumers, they go overseas to buy a house and even buy milk for people, both in the purchasing power of large boldness shocked locals.
In fact, the hands of the "Chinese Mother" is the essence of the gold rush of overseas Chinese people have money. Though because gold is an investment product, but it is a luxury, because it is not a necessity of life, so the premise of "one China Aunt Gold Rush" is the Chinese consumer has the strength of the gold consumption.

Many people outside China who aggressively buy gold held mock attitude, but in fact, both from an investment point of view or from a consumer perspective, this seems to be beyond reproach. From an investment perspective, there lose their investments have earned, and gold as a scarce resource is certainly a long-term bullish this is the consensus, but the problem is the timing of intervention, but no matter what kind of investment, no one can guarantee a minimum point of intervention. From the consumer point of view, buying gold more understandable when you like or need a commodity, commodity prices fell sharply just even buy more than is normal. From a practical situation, "Chinese Mother" is more in overseas gold jewelry gold consumer, that white is bought already worn on the neck, fingers, got to enjoy.

Last year was the international gold market for nearly 30 years, the most ruthless year decline, but China's gold demand for the first time to become the world's first year. This appears to be a disadvantage, but from another point of view in fact cost-effective, because the price of gold fell when we bought the most gold.

The key should not be laughed at, "Chinese Mother", but also that the gold in the eyes of Asians in particular China has a very special position in China's current stage, the gold as a breakthrough into the investment is not a good way to lose. From a practical point of view, even if the decline in value, but most people psychologically speaking, but also some "hands of gold, hearts do not panic" mentality, at least psychologically should be more than "just a piece of paper," the stock is more practical some. Moreover, the internationally recognized gold as rare precious metals , but also for the countries central banks stored, its iconic value is far higher than other storage product. From this perspective, the "Chinese Mother" Select the direction of gold as an investment and can not be said to be mistakes.
What's more gold will continue to fall in 2014 but analysts speculated that currently only, like what analysts had predicted no gold in 2013 will fall the same. But also comments that the current 1200 per ounce dollars or so already close to the cost of mining gold, gold prices have dropped in theory no down.

News Track

Last year, China ranked the world's largest gold consumer

"Unless the Chinese in 2013, the gold price fell too will be more severe." It has become the consensus of some people in the industry.

Last year was the international price of gold fell the most ruthless of the year, but also in that year, China overtook India to become the world's largest gold consumer, analysts believe that this is mainly because Chinese consumers for jewelery, Panda coins and small bars surge in purchases . Thomson Reuters GFMS Gold Survey from the data show that last year China gold demand reached 1,189.8 tons, up 32 percent surge compared to 2003 increased fivefold. Analysts believe that China and the international gold price surge in gold demand plummeted about. Data show that China's gold jewelry manufacturing grew by nearly 1/3 to reach 724 tons last year, the first time more than India. GFMS said a manager of precious metals, gold has been popular in China, and now gold is increasingly seen as an asset class. Chinese people wealth is increasing, rising disposable income in the past, ultra-high gold prices depressed people's needs, so when the gold price falls, people buy high enthusiasm.

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