One of the biggest demographic trends that will be occurring over the next ten years is the rising middle class in China. The China middle class is growing by approximately 50mm people a year and represents 25% of the population now, up from less than 5% of the population a decade ago. That means, for instance, that China has gone from being the 20th country ranked by oil consumption to the 2nd country and is now number one in terms of total energy consumption. It also means the demand for luxuries by this nouveau middle class is now insatiable, growing, and cannot easily be satisfied due to lack of supply....Altucher lists seven points in Kingold's favour, including growth of the market as well as growth of the company itself. Three of them involve strong revenue growth, strong earnings growth and a low forward P/E ratio. The company's trailing P/E is about 18 right now.
Tuesday, July 27, 2010
James Altucher's Favourite Gold Stock
Yes, he has one. Despite his aversion to gold as an investment, he likes Kingold because he thinks it has a lock on the mainland Chinese jewelry market although it's present market share is only 4.3% by his calculation. The company sells gold jewelry, and has its supply chain management fine-tuned to the point where there's an average of five days between buying the raw gold and selling the jewelry. According to Alucher, who believes in gold as a luxury good, the Chinese jewelry market is growing strong.