WGC Forecasts Chinese Gold Demand Doubling Within Decade

The World Gold Council has issued a report, excerpted here, which pegs gold as underowned by the People's Bank of China and the Chinese. Although Chinese gold holdings have increased at an average rate of 13% yearly over the last five years, the WGC has used a more conservative 7.2% annual benchmark rate for this year and the nine following. They did allow for the possibility that demand would grow more rapidly, though.

Of interest to peak-gold watchers, at least, is this prediction regarding Chinese supply:

The report also predicted that China's gold mines would not keep pace with demand and could even be exhausted within six years....

During the last decade, Chinese gold mining producers have stepped up production by 84pc, although its known reserves account for just 4pc of total known global gold reserves, the council said.

Assuming these figures are correct, it estimated that China could exhaust its known gold mining reserves in six years' time.

Of course, the PRC isn't the whole world. Predicting a supply-and-demand imbalance on the demand side is nice, but it could be compensated for by imbalances on the other side in the rest of the world. China's an important player, though, and such an imbalance in the PRC will help the gold price ceteris paribus.