Economic turmoil in China has fueled an increased appetite for gold in one of the world's largest economies. What does this mean for the international gold market? And is now a good time to buy gold?
It's no secret China's economy is not doing well. Their economy has slowed down with no recovery in sight. Their real estate crisis is getting worse by the day, and their stock market has lost $5 trillion in value. But one thing that has done well in China is gold. Both the Chinese government and Chinese citizens are snapping up gold like there's no tomorrow
Gold buying last year among the world's central banks was the second highest on record. And guess who led the way? China. They bought 225 tons of gold, bringing their total gold reserves to a record 2235 tons. And Chinese citizens, who are one of the two largest gold buyers in the world, bought 280 tons of bullion and 603 tons of gold jewelry, outpacing the number one buyer, which is India.
What is driving Chinese gold purchases? Chinese investors are worried that the real estate and the stock market may not recover soon. And gold has performed better than most Chinese asset classes. They also see their own central bank buying a lot of gold, which makes many of them think that gold might be right for them too.
China is already one of the two top buyers of gold in the world. And when Chinese demand for gold increases, it impacts the international gold market, along with wars in Ukraine and Gaza and the slow Chinese economy. Chinese gold demand has pushed global gold demand to record highs last year With gold in limited supply, that high demand has supported high gold prices. Gold hit an all time high in December at slightly over $2,100 per ounce in gold. Prices have remained in that range ever since. With gold prices so high, is it still a good time to buy gold?
Well, that answer depends on the reason why a person is buying gold. The reasons why a day trader buys gold versus a person who is investing in their retirement are very different. For most people investing in their retirement, their investment goals are to have enough money to retire comfortably. And because it's so hard to predict how the world and the economy will be doing in the future, many people believe that diversifying their retirement portfolios is one of the best ways to protect their retirement. If this is your reason to buy gold, then it is almost always a good time to diversify.
One of the easiest ways to diversify your retirement is with gold through a precious metal IRA. And that's a type of IRA that you can hold real gold or silver that you actually own. This balances your retirement with an asset that will always be worth something in the future. And it also acts like an insurance policy when stocks and the value of the dollar go down. I have my precious metal IRA from U.S. Money Reserve.
