Courtesy Jim Willies Hat Trick Letter..

◄$$$ CHINESE CONTINUE TO DOMINATE IN PHYSICAL GOLD DEMAND. A 6% RISE IN JEWELRY DEMAND PUSHED CHINA TO 21% OF GLOBAL DEMAND. A 22% RISE IN RETAIL DEMAND PUSHED CHINA TO 43% OF GLOBAL DEMAND. CHINESE CITIZENS ADD PRESSURE TO THE GOLD MANIPULATORS IN THE WEST. $$$

The insatiable Chinese appetite for gold continues to exceed supply. The latest research document from the World Gold Council comes from an analyst standing in China, one Elly Ong. The study looks at both supply and demand in the country. It concludes that the economic demographics of the country support a robust outlook for gold demand. It points out the sustained structural shift in Chinese gold demand and supply that is very favorable to a rising gold price. The study describes an insatiable appetite for gold which is not offset by local domestic mine supply. Gold supply lags badly behind demand. Their conclusion stated, "Time will tell how China will evolve, as the nation faces multiple challenges in the wake of the global financial crisis. With ongoing uncertainties surrounding the economic recovery, currency and inflation, the search for alternative international asset choices for both investors and the central bank should, in our view and for the reasons outlined in this report, clearly involve consideration of gold." They explicitly advise the Chinese people and Chinese Govt to accumulate gold!

Chinese jewelry demand has averaged 250 tonnes of gold per annum over the past ten years. Total jewelry & bar hoarding demand has averaged 3355 tonnes annually over the same period, according to GFMS data. That gives China an average market share of just over 7% of global demand. Last year, jewelry demand in China grew by 6% on an annual basis to reach 347 tonnes, which was equivalent to 21% of world jewelry demand. Higher Chinese income will surely go hand in hand with greater gold demand. A high savings ratio, plus limited alternative investment vehicles, points to a growing interest among the Chinese in commodity investment generally. Gold is their lead commodity investment. Net Chinese retail investment in gold was 81 tonnes in 2009, up 22% on an annual basis. Based on the defined net retail investment in the World Gold Council report, China has accounted for 43% of the world total last year. A red flag signal comes from the China Investment Corp, which is moving into commodities and real estate. Recent filings with the SEC show that the CIC took a 1.45 million share stake in the SPDR Gold Shares Fund (infamous corrupt GLD) in New York, valued at $1.6 billion. They are led to believe they therefore own an equivalent of 4.5 tonnes of gold, when actually they own a large pile of paper with gold certificate claims written on them. The ink is far less valuable than the gold. The CIC might be setting up Wall Street for criminal charges and world court prosecution from gold fund fraud. Just speculating, but the Chinese are not stupid and gullible. They usually take steps after much study. They might have constructed a gold leverage tool.