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Is this a hoax, or has China's true gold demand landed at
last...?
LAST TIME I was in Hong Kong, I spotted what looked to the
untrained eye like a UFO craze.
News-stands, billboards,
flyposters, TV news...I could only guess at the details,
but the images of flying saucers were far from alien. Britain, like the US, has
enjoyed its own UFO crazes often enough. Science fiction was a fact of my childhood,
Close Encounters, crop circles and all.
So Hong Kong's UFO fixation
felt oddly familiar. Odd because it was so out of sync. Or rather, it put me out
of step. Here was a mini-mania both recognizable yet utterly foreign at once.
UFO sightings in the
UK, as in the US and Europe, still make
the news today of
course. But instead of panic or fascination, the tone towards UFOs is now knowing,
almost weary. Sightings
are dismissed with a smile by TV anchors. They're just Chinese lanterns released
from a party, or high-altitude balloons released by kids. Crop circles were a
cider-fuelled hoax. And alien abductees simply give documentary-makers someone to
mock.
Hong Kong's little deluge
of UFO images, in contrast, plus adverts for meetings and seminars, made what
little I saw feel like a real invasion – a true event in popular culture,
if not in scientific fact. A November 2012 conference in the city set a world
record for UFO conventions, with 1,700 attendees. Via the magic-science of the internet,
I see modern China has long had
UFO crazes, and the
media take them very seriously. The authorities apparently approve scientific
study by PhD specialists.
Which brings us to gold.
China's gold demand
isn't quite like anything analysts or traders have seen before. Familiar from
India's long-standing love, its speed and growth are new in just the same wayt as an '80s-style UFO craze isn't.
The volume of metal
being hoovered up in the world's second largest economy
is staggering. More than 1,000 tonnes
of gold was delivered through
the Shanghai Gold Exchange in the first half of 2013, more than the whole-year
total in 2012. Premiums over international benchmarks have slipped back, but only
from historic records as wholesalers continue to chase supplies. And as Swiss
bank (and major bullion dealer) UBS notes, Chinese banks
are only widening
access for private households still further, expanding the millions of gold savers with new retail products.
Now, whether this is
a "mania" or investing craze depends on whether it twinkles, fades and
then vanishes – only to be revealed as a trick of the light. There's plenty
of amateur UFO-ology on the internet to hoax Western gold and silver investors,
too. And it's crucial to note that this 2013 gear-change in China's gold demand
only took place after the initial phase of this spring's price crash. The surge
wasn't there at $1500 or $1600 the ounce.
Still, like a very scary
flying saucer, China's true appetite for physical gold does seem to have landed.
Just what would be happening to gold prices if that weight of demand were coming from the US or Europe?
Adrian Ash
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