Demand for Gold in China to Double Within Ten Years

    BEIJING, LONDON and NEW YORK, March 29, 2010 /PRNewswire/ --

    - Latest World Gold Council Analysis Suggests Medium Term Outlook
      for Chinese Gold Mining Supply Will be Challenging

    - Chinese Gold Demand Growth Expected to Outstrip Domestic Supply

Chinese demand for gold is set to double in tonnage terms within just ten years according to the latest World Gold Council (WGC) analysis. Chinese gold consumption was worth more than US$14billion in 2009[1], which is equivalent to 11% of global gold demand. Launched today, Gold in the Year of the Tiger provides an outlook for all aspects of gold's supply and demand fundamentals in China.

Marcus Grubb, Managing Director, Investment at WGC, said:

"The excitement generated by the Chinese economic growth story is not new. However, clarifying the impact of China's GDP growth trajectory on the outlook for the Chinese gold market has been elusive - until today.

"Now one of the world's largest economies, China has already rapidly become a prominent gold market. However, our analysis confirms that significant untapped growth potential exists in the Chinese gold market. In China, if gold demand continues to accelerate and becomes more comparable with other major markets, WGC expects it to double in tonnage terms within the next decade, which would represent annual gold demand of approximately US$29 billion at year end 2009 average prices."

Over the past five years, demand for gold has increased at an average rate of 13% per annum in China.

    WGC's key findings were:

    - Chinese consumption intensity[2] lags other major markets
      substantially. If gold were consumed in China at the same per capita
      rate as in India, Hong Kong or Saudi Arabia, annual Chinese demand
      could increase by 100 to 4,000 tonnes in the jewellery sector alone.

    - Total gold investment demand in China has grown in line with
      the country's GDP and population during this period and WGC expects
      this trend to continue going forward.

    - While China is the world's sixth largest official holder of
      gold, its gold reserves currently account for less than 2% of total
      reserves and, therefore, remain low by international standards. Even
      adding 10% from its current level would translate to an additional 100
      tonnes of gold offtake.

    - While gold demand is accelerating, WGC expects Chinese
      supply growth to be challenging in the medium to long term; and is
      likely to decline in the future.

    - During the last decade, Chinese gold mining producers have
      stepped up gold production by 84%, however its known reserves account
      for just 4% of total known global gold reserves[3]. Assuming these
      figures are correct, WGC estimates suggest that China could exhaust its
      known gold mining reserves in six years from now.

    - This supply trend is only likely to reverse if China, which
      is still relatively undiscovered in terms of global exploration
      budgets, were to attract significant capital investment for
      exploration.

Eily Ong, Investment Research Manager at WGC and author of the report, said:

"Our analysis confirms the potential for an increasing imbalance in supply and demand in China. Gold demand has already outpaced Chinese production growth since 1992, even before the deregulation of private ownership a decade later. However, our analysis shows that if gold demand were to continue to increase so markedly, domestic supply would be unable to keep pace. Whatever the outcome, China's outlook will almost certainly have implications for the global gold market."

For a copy of the report please follow this link: http://www.mediacentre.gold.org

Notes to Editors:

World Gold Council

World Gold Council's mission is to stimulate and sustain the demand for gold and to create enduring value for its stakeholders. It is funded by the world's leading gold mining companies.

For further information visit: http://www.gold.org.

[1] At 2009 average prices of US$972.35/oz

[2] Intensity of gold consumption is measured by looking at each country's gold demand per capita versus its gross domestic product (GDP) per capita.

    [3] According to figures from the US Geological Survey
    For a summary of the report please contact: [email protected]

    For further Information, please contact:

    WGC

    Matt Graydon, Director - Corporate Communications, World Gold
    Council, on + 44(0)207-826-4716, or [email protected]

    Stephanie Mackrell, Head of Media Relations, World Gold
    Council, on +44(0)207-826-4763, or [email protected]

    MS&L

    London: Clare Allison, + 44(0)207-307-5342, or
    [email protected]

    Beijing: Jenna Qian, +86-10-6510-22228, or
    [email protected]

    New York: David Schreader, +1-212-468-4313, or
    [email protected]

    Dubai: James Madsen, +971-4-367-6175, or
    [email protected]

SOURCE World Gold Council

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