Chinas Jewelry Industry and Gold Demand

1
Chinas Jewelry Industry and Gold Demand

• Ross Anderson

2
Chinese Foreign Currency Reserves

• 1 Trillion dollars of U.S. Bonds
• Only 1.1 Gold
• U.S., European Countries hold over 50 gold

3
U.S. Dollar Vs. Yuan
4
Forex Cont.

• Chinese Govt Desires to diversify reserves
• Buying Gold
• Concern for Value of Dollar

5
Chinese Gold Production

• Smaller SOEs
• Chinese Govt looking to merge for economies of
  scale
• 9 months of 2006-169.4 tons, 8 increase
• 10 increase projected

6
Chinese Gold Consumption

• 2006- Consumed 300 tons
• 2007- Projected consumption of 350 tons
• Industrial demand increasing
• Chinese Gold consumption has increased 31
  already this year.
• Year of the Pig

7
Chinas Effect on World Prices
8
Chinese Jewelry Industry

• Early Chinese Industry Vs. Present
• 1980- 100 Million RMB
• 2006- 140 Billion RMB, 5.49 Billion
• 1980- 20,000 Jobs provided
• 2006- 3 Million Jobs

9
Chinese Jewelry Production

• Consumed 241.4 tons of gold
• Produced 95 of worlds Pearls

10
Jewelry Prices

• Jewelry sold in China by weight
• Chinese Pearls cost 113/km, French Polynesian
  Pearls cost 10,000/km

11
Chinese Exports

• 22 of world totals, largest exporter of Jewelry,
  47 of firms
• Hong Kong adds another 6, Taiwan 5
• U.S. corporations like Wal-Mart large contributors

12
Industry Projections

• Has been growing between 10-15 for past few
  years
• Expected to continue growing at rates above 15
• Fairly small industry at .8 of GDP, but growing

13
Conclusions

• Chinese Gold Demand having a large effect on
  world prices
• Economy suited to jewelry production
• As Chinese get richer, Jewelry industry will
  expand