"Back in May, I posted a blog entry called “Chinese Catch the Gold Bug,” in which I noted a strong surge in gold-buying by Chinese investors. I attributed it, in part, to the Chinese government’s crackdown on the property market: uncertain whether real estate would continue to serve as a reliable store of value, like gold, the Chinese were turning to gold itself as an alternative.
Subsequently, I’ve observed how the vast amounts of new stimulus money injected into the Chinese economy have been channeled, initially at least, into tangible assets rather than consumption, fueling skyrocketing prices for real estate, jade, fine art, fine wine, rare tea, etc. The price of gold, of course, is determined by global markets, but I maintained that surging Chinese demand — consistent with the asset inflation story I was telling – was contributing to the 27% run-up in gold prices this year.
Now the Wall Street Journal confirms that perception was essentially correct..."
at http://www.businessinsider.com/a-crackdown-on-chinese-real-estate-will-push-all-that-liquidity-into-gold-2010-12?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29
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