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No guarantee for "Chinese Dama"'s gold dream to shine in 2014

English.news.cn   2014-02-17 15:06:36


A salesperson arranges gold jewelry at a gold store in Lin'an City, east China's Zhejiang Province, Feb. 10, 2014. China Gold Association reported on Feb. 10 that China's gold consumption for the first time exceeded 1,000 tons to reach 1,176. 40 tons in 2013, a year on year increase of 41.36 percent. Meanwhile, China's gold output rose 6.2 percent in 2013 to a record 428.16 tons.

By Chao Luan

BEIJING, Feb. 17 (Xinhuanet) -- “Ma Shang You Qian”, the four Chinese auspicious characters, mean “to be rich at once in the Chinese Year of the Horse”.

True, “to be rich at once!” is many people’s dream, especially for the “Chinese Dama”.

Though with not much knowledge about investment and basic techniques, “Chinese Dama” do believe that pouring money on gold is a trustworthy and solid way to make profit.

“Chinese Dama” refers to a category of consumer segment described by the Wall Street Journal as "bargain-hunting middle-aged Chinese women" who "keep a tight grip on the family purse and an eagle eye on gold prices."

According to the China Gold Association’s figure, gold consumption surged 41.36 percent year on year to 1,176.4 tonnes in 2013, nearly tripling the amount of its total domestic production.

And the “Chinese Dama” contributed greatly to the consumption, which was much higher than the around 10 percent growth in 2012.

But, in terms of investment, year 2013 was not particularly good. In a wellknown Beijing gold retail store, “The average price was down to 302 yuan per gram at the end of year 2013, about 20 percent lower than the beginning of the year, which was around 400 yuan per gram”, the store said.

The “Chinese Dama”, they rushed for gold, they have lost about 100 yuan per gram. Let’s assume that one of them bought 1 kg, then she could have faced about 100,000 yuan’s loss at the end of year 2013. Unluckily, this is not an assumption for the store only, it happened in many places around China.

Yet, many of the “Chinese Dama” still hold optimistic view of the gold market. In their view, drop of price will a good opportunity to go bottom fishing, to cover their loss or gain big profit.

Not only the “Chinese Dama”, large number of consumers in general, instead of worrying, are not affected too much by the rises and falls of the gold market.

Gold futures on the New York Mercantile Exchange on Feb. 10, 2014 closed at the highest level since mid-November of 2013 as Chinese buyers returned to the market after Year of the Horse holiday.

So buying gold is still a safe investment? President of south China’s Guangdong gold association Zheng Jianhua said, “Gold is a commodity, but also has functions of certain currency, factors such as trend of dollar, international political and economic situation, inflation, interest rates and oil prices would cause certain influence to gold price. However, these factors are difficult to predict.”

Internationally, at the beginning of this year, gold prices climbed about 6 percent due to currency turmoils in some emerging markets.

And most recently, gold prices surged to three-month high to reach 1,294.40 U.S. dollars per ounce after U.S. Federal Reserve Chairwoman Janet Yellen's testimony on monetary policy, according to Bullion Vault’s figure.

Nevertheless, it is in doubt if gold price can retain its recent gains. "One of the problems for gold right now is that there are less participants and less momentum," said Frank Lesh, broker and futures analyst with Future Path Trading.

There are different voices about gold prices trend in 2014. Goldman Sachs believes gold will still stay in a significant downward trend, at least 15 percent while European banks, represented by Deutsche Bank, believe it is to emerge, at least to 1,400 dollars per ounce.

No matter how many voices about the market, rational decision on investment may always keep investors on the safe ground.

Experts believed, even gold can be considered as valuable and tangible asset to invest, ordinary consumers, however, should avoid seeking quick success and instant benefits.

Digging deep for gold profit should be focused and considered as a long term investment behavior.

No one can guarantee the “Chinese Dama” who buy gold bars and jewelries because of a kind of passionate habit or a heartbreak feelings, have their dream shine in 2014, the expert added.

 

Related:

China's gold consumption surges

BEIJING, Feb. 11 (Xinhua) -- China's gold consumption surpassed the 1,000-tonne mark last year as domestic demand for jewelry and bars surged despite the lackluster global market.

Consumption soared 41.36 percent year on year to 1,176.4 tonnes in 2013, nearly triple the amount of its total domestic gold production, data released by China Gold Association (CGA) showed on Monday. Full Story

 

Gold keeps rising for fifth session

CHICAGO, Feb. 11 (Xinhua) -- Gold futures on the COMEX division of the New York Mercantile Exchange kept rising for the fifth session Tuesday as Federal Reserve Chair Janet Yellen indicated the Fed would stay the policy course on plans to gradually cut stimulus.

The most active gold contract for April delivery rose 15.1 U.S. dollars, or 1.18 percent, to settle at 1,289.8 dollars per ounce. Full Story

 

 

Editor: Luan
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