-China’s romance with gold, though intense, still appears to be in the courting stage and there is a lot of room for growth in the demand for the metal, said an official of a major gold industry association.
In an interview with Kitco News, Juan Carlos Artigas, global head of investment research for the World Gold Council, emphasized that China’s economy has grown by double-digits in the last decade and the demand for gold has intensified as consumer disposable income rose.
Despite recent talk of a slower economy, Artigas said there is still growth. Gold consumption has increased during the last decade as China’s economy has grown.
“I think as long as China grows, whether it is at 10%, at 8% or 7%, it is a growing economy. That is having a positive impact on the overall consumer spending. And that will continue to be very, very supportive of the gold market,” Artigas said.
China still has a long way to go, too, in the penetration of the market. Access to gold by investors and consumers continues to increase, he said.
In India, a three-week old strike by many of the country’s jewelers against a government tax on some of their products will only have a short-term effect and will not impact significantly the country’s demand for gold in 2012, Artigas said.
The strike consists of many jewelers keeping their shops closed to protest the government doubling import duties on gold to 4% of value in its recent budget. It also imposed a 0.3% excise tax on unbranded jewelry.
Both actions have raised the ire of many in what is estimated at $200 billion-a-year jewelry industry. Reuters News Agency report that experts are predicting the moves could cut India’s gold imports by a third to 655 metric tons in 2012.
Artigas said the WGC view is that in the short term, the strike may have some impact, but it is not really affecting the long-term trend for gold in India.
He said Indian consumers and investors have a strong affinity for gold and a deep understanding of the market in that gold is a long-term purchase. “The long-term trend still remains firmly in place,” said Artigas.
Gold dropped earlier in the week after the Federal Open Market Committee’s minutes caused the markets to think that further quantitative easing is out or much further down the road.
Artigas said part of the investment community will continue to watch the Fed for signals, but noted that there is a diverse set of factors that will influence gold. “Worldwide drivers remain much in place,” he said. “You have continued interest from India, China in terms of gold, not only in luxury items but in savings and investments. You have central-bank activity.”
Artigas is among several leading gold industry professionals who will be speaking at the Initiatives in Art and Culture’s Second Annual gold conference, “Gold: Vision, Value and Values,” in New York City April 12-13. The World Gold Council is the premier event sponsor
The conference features contemporary artists who make jewelry and other objects with gold, as well as historical work and techniques. An additional focus is the rising consumption of the BRIC countries (Brazil, Russia, India and China.)
Terry Wooten – Kitco News- April 5, 2012