8.4.2010
In a recent survey:
Asian investors, mainly 75% of Indians & Indonesians, and over 50% of Chinese said they were likely to buy gold – only 11% of Americans said the same.
This probably results from many reasons – for example, most people are familiar with the fact that gold is popular in India as a wedding gift/sign of wealth. Also throughout Asia, saving in precious metals has been common for thousands of years. The Chinese were happy to take Silver from the Spaniards in exchange for silk as the Chinese then and now, see precious metals as a way to preserve wealth. Much more recently, China even has their government encouraging private purchase of gold. This is likely not necessary to convince the Chinese and other Asians to purchase gold. Asians have currency crises in their recent history and similar to wise people in Mexico, they know that REAL assets are the key to retaining wealth, i.e. the fruits of their labor.
Interestingly now, as Asian currencies strengthen, it will be increasingly less expensive vis a vis Americans and Western Europeans to buy gold and silver. trading paper (i.e. dollars) for gold will become much more expensive for Americans and Europeans in the future if predictions of a further declining dollar come true. Many people have likely heard the inflation argument for owning gold, but I am sure few people are calculating the effect of rising Asian currency valuation on the average Asian’s ability to purchase increasing amounts of gold and silver and the resultant demand stoked rise in gold prices for those in declining western economies.
This could further increase the dollar price of gold going forward as more Asians demand more precious metals – with average Chinese /Indonesian/ Malaysian incomes growing to the point where they can support themselves and have much extra to save and purchase precious metals. This fact coupled with the many other forces at work – money printing/dollar devaluation being one – could make real assets, including precious metals, real estate, farm land, water rights and the like, even stronger preservers of value.
