China Needs GoldEquedia Jan 17-11
China is undoubtedly the world's hungriest country for all things precious metals.
Over the past five years, China's gold consumption has grown by a whopping 84% and is expected to easily double over the next decade.
As a matter of fact its hunger for gold shot gold prices to new levels a few months back when the Shanghai Gold Exchange said that China's gold imports jumped 500% in the first 10 months from the entire amount shipped in 2009.
As such, it has turned China, already the largest bullion miner, into a major overseas buyer for the first time in recent history. But China would much rather produce for itself, than buy from others. And with good reason...
Both infrastructure and production costs in China are among the lowest in the world.
But there's a problem.
When you combine one of the world's lowest gold and silver production costs with the world's highest demand for gold, you end up with a country that will exhaust its current resources very fast.
China has already reached an estimated new production record of over 340 tonnes in 2010. That's over an 8% increase from the year before and the 6th straight year in which it has raise its output.
The World Gold Council predicts that China could run out of gold in six years.
That means China needs to find more gold...and fast.