The shaky gold price, the Chinese version of the belly’Tama’ is a relief pitcher?

The international gold price has dropped to the lowest level in eight months due to recent US bond yields and rising cryptocurrency values. On the 2nd, international gold prices fell to $1,707 per ounce, showing the largest decline this year.

However, Goldman Sachs said, “Although the attractiveness of gold has declined, the weakness will not last for a long time, and the declining gold price could further stimulate China, the largest gold consumer.” The opinions of Chinese economists are the same. They believe that’Tama’ will return and raise the price of gold.

In 2013, gold prices fell 20% in one day, hitting $1371.51 per ounce. But it was weird. In the Chinese gold consumption market, prices have rather rebounded.

Tama (大媽) was used to refer to a strong and repressive ajumma, but now it is used to refer to a middle-aged woman with a strong consumption power that controls the Chinese economy. The range of their reach is not only gold, but also real estate and bitcoin.

When gold prices plummeted in 2013, Tama bought more than 300 tons of gold from overseas markets. It amounts to about 17,288 billion won. Despite the 90-fold increase in bitcoin price in 2013 alone, Chinese daughters played a big role.

At the time, Tama’s gold investment strategy was consequently correct. In 2020, the international gold price rose more than 9%, and the rise was close to 30%.

However, this year’s situation is not easy. This is because China’s gold consumption is not the same as it used to be. According to an announcement by the China Gold Association (CGA) on the 2nd, China’s gold consumption last year was 820.98 tons, down 18.1% from the previous year. Already, in 2019, China’s gold consumption decreased by 12.9% compared to the previous year. It is a decline in the second year.

Why?

First of all, we must look at the situation in July 2020. At that time, as gold prices marched high, selling prices surged. This is because the big players in the gold market have not missed the opportunity to realize profits that have been hard earned after waiting about 7 years.

In addition, due to the anticipation of the spread of vaccines and the economic recovery, there is an analysis that the demand of’big hands’ is shifting to risky assets such as stocks and bitcoins.

It is also attributable to the decline in marriage and birth rates.

The biggest consumer of gold in China is marriage and childbirth. There may be a desire for luxury and display, but there are still many Chinese who prefer to hold gold for investment or gift. However, marriage and fertility rates in China have recently dropped significantly, which has negatively affected the gold market.

This means that the United States, the world’s number one gold reserve, will not let go of buying gold from China. China prefers to hold gold over dollar-based assets, but the US also never wants to lose control of the gold market. China, which opened the Shanghai Gold Exchange in 2014, also expressed its ambition to’determine international gold prices in Shanghai’.

According to the World Gold Commission’s announcement in 2019, the total amount of gold held by central banks around the world was the U.S. at 8133 tons, followed by China (4,000 tons).

However, the US Marketwatch predicted that China’s gold holdings would be two to three times more than the figures announced. This is because China is encouraging civilians to own gold, and it is estimated that the amount of gold that civilians have will be huge.

The United States seems to be watching. The Financial Times (FT) predicted that the gold market will remain at its current level unless the direction of monetary policy is reversed by the Fed (FED). The world is paying attention to what kind of posture Chinese’tamas’ will take.

China Lab = Kim Eun-soo, editor