Demand from China for Gold as private investments is likely to increase gold bullion imports

Demand from China for Gold as private investments is likely to increase gold bullion imports past 400 tonnes in 2011, according to leading metals consultancy GFMS. Philip Kalpwijk, executive chairman of GFMS, said that an increased appetite for silver, coupled with 16% annual growth forecast in industrial demand suggests that total Chinese silver consumption could surpass domestic supply this year.

“There is a widening demand for silver as investment in China because of its lower entry point,” Kalpwijk stated at a conference in Shanghai. “It is also being increasingly recognised as an physical investment asset, which will support demand.”

The substantial rise in Chinese demand has been fueled by inflation concerns and tepid returns in other sectors of the financial markets, including equities and real estate. Chinese gold demand has also been supported by the government’s encouragement of retail consumption, illustrated by its decision to expand the number of financial institutions permitted to import bullion.