Author Topic: Article. China inflation and investing options for average Chinese. NY Times.  (Read 1714 times)

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Online Birdman

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http://www.nytimes.com/2011/10/10/business/global/households-pay-a-price-for-chinas-growth.html

"But tomorrow’s money may not be worth as much as today’s — not as long as their savings account earns only a 3 percent interest rate while inflation lopes along at 6 percent or more.

Yet the Wangs see no good alternatives to stashing nearly two-thirds of their monthly income in the bank. They are afraid to invest in China’s notoriously volatile stock market. And Chinese law sharply limits their ability to invest overseas or otherwise send money outside the country."

This article describes the inflationary context well, but I think it overlooks one option that may be used by the Chinese, investing in gold and rare coins.  I wonder what percent of the average Chinese hold silver or gold as a way to protect their savings?

tamo42

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China is expected to consume about 775 tons of gold this year and about 5,000 tons of silver last year.

So averaged out over 1.3 billion people, that's about 0.02 troy ounces of gold and 0.11 troy ounces of silver per year.

I'm guessing most of that is skewed into populations in urban centers.

Offline BChung

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percentage wise not very high. But for 1.3 billion people 5-10% of 1.3 Billions is a alootttt of people already.

tamo42

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Imagine what would happen if Chinese people got serious about stacking some gold and silver!

Offline ghostrider80811

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Imagine what would happen if Chinese people got serious about stacking some gold and silver!

I believe in due time the sentiment for Gold and Silver will turn more positive as people around the world rediscover PM due to the rapid decline of fiat currency, inflation, world war, and high unemployment among others.  The good news depending on your perspective is the Chinese are shrewd savers vs. Americans which the last time I check their savings rate is near 0%.