Marcus Grubb, Managing Director, Investment at WGC, said:
"The excitement generated by the Chinese economic growth story is not new. However, clarifying the impact of China's GDP growth trajectory on the outlook for the Chinese gold market has been elusive - until today.
"Now one of the world's largest economies, China has already rapidly become a prominent gold market. However, our analysis confirms that significant untapped growth potential exists in the Chinese gold market. In China, if gold demand continues to accelerate and becomes more comparable with other major markets, WGC expects it to double in tonnage terms within the next decade, which would represent annual gold demand of approximately US$29 billion at year end 2009 average prices."
Over the past five years, demand for gold has increased at an average rate of 13% per annum in China.
The World Gold Council's key findings were:
- Chinese consumption intensity lags other major markets substantially
- Total gold investment demand in China has grown in line with the country's GDP and population.
- China's gold reserves currently account for less than 2% of total reserves and, therefore, remain low by international standards.
- WGC expects Chinese supply growth to be challenging in the medium to long term; and is likely to decline in the future.
- During the last decade, Chinese gold mining producers have stepped up gold production by 84%, however its known reserves account for just 4% of total known global gold reserves. This supply trend is only likely to reverse if China were to attract significant capital investment for exploration.