2013年1月22日 星期二

First-Hand Account of Gold & Silver Mania in China- Black Friday Style Mobs Scrambling for Bullion

大陸咁快為實金實銀瘋癲啦 ?

幾時輪到香港 ?


www.silverdoctors.com

With the recent claims from an Apple contractor that a Chinese silver shortage is the culprit for the production delay in the new I-Macs, an SD reader who has recently moved to China has given SilverDoctors a MUST READ first-hand account of the retail gold and silver mania underway in mainland China. 

With the Chinese New Year less than a month away, Ichban describes Chinese demand for gold and silver in Beijing as a tidal wave, and states that the demand for gold and silver is more intense than Thanksgiving/ Black Friday mobs in the US, despite the nearly 60% premiums retail dealers are asking for silver bullion!!

Ichban gives readers a glimpse of what to expect when the mania stage of the gold and silver bull markets finally reaches the US, as he describes the scene at Chinese retail bullion stores: 
Despite these high premiums, I have never seen such frenzied buying in my life!  I am a young adult male and 40 year old Chinese women are shoving me out of the way because they are trying to buy some gold and silver!

Ichban’s full first-hand account of China’s gold and silver mania below:

Doc,
I have been in China for the past few months and I have been witnessing the silver and gold demand first hand at ground zero. Let me tell you. At first, I was quite stunned to see the small silver and gold shops that sell everything but the bullion rounds we are used to seeing back in the states like ASEs, Maples, Krugerrands, and even Chinese Pandas (these are only legally sold at the National Chinese Banks like Bank of China, ICBC, etc).
The reason I was stunned is that I did not witness the typical scene described back in Western websites about the massive PM demand in China when I first arrived in October. Of course there is a lot of retail demand in China for silver and gold but the bulk of this retail demand appears to comes around the Chinese new year (which is Feb 9 this year).  The typical scene at a silver/gold store did not impress me. This changed very quickly as the Chinese buying habits according to a Western mind (me) are not very predictable and appear to be lemming like or Giffen-good esque. In other words, if they see that something will increase their prestige or esteem and people are catching on, then all of a sudden like a tidal wave, everyone will start buying it, wearing it, or doing whatever “it” is. This is a common trait in South Korea, where 1 product or musician can become very popular out of no where. One has to keep in mind that in general, Asia, which is not based on Judeo-Christian norms, is an area all about perception, prestige, and not losing face.
I just wanted to tell you that the last couple weeks, these retail shops which are often found around big box stores like Carrefour or Wal-Mart in China, have been absolutely swamped with buyers. I was not impressed with the traffic a couple months ago but there is a lot of money flowing to gold and silver the last couple weeks here and it isn’t showing any signs of abating soon. I have never witnessed anything like it before, and this is comparing it to Thanksgiving shopping in the US, where people get stabbed over the newest Iphone that is released on Thanksgiving.
For a little background: The Chinese New Year is the biggest holiday celebration in China of the year and it is based of the Lunar calendar (but it is usually sometime in February or early March according to the Gregorian calendar). This is the only time of the year that every Chinese person has some time off to visit with family, similar to our Christmas but even bigger in my opinion because of the magnitude of people moving around in China and the amount of time off (usually 1 month). With that in mind, gift giving is a very important thing in China because of something called guanxi (pronounced gwan she) and mianzi (pronounced meon zuh).
The Chinese are the ultimate source when it comes to presentation and perception. Because of this, the children will buy the parents a gift of something that they can wear, and it is almost always in the form of Gold and/or Silver. Silver and Gold signify money and wealth to all Chinese and this is just a basic concept to them. Anyways, instead of buying your mother a vacuum cleaner for Christmas a typical Chinese son or daughter would prioritize spending 500-1500 yuan on gold/silver for their parents (focusing on the mother first). This is $80 to $240 in USD.But the buying doesn’t stop with the children. Usually the mother and father will go out and buy gold and silver on their own in addition to their son or daughter buying them gold and silver. Just today while I was at Carrefour, I saw multiple grandmas, fathers, and mothers wearing gold necklaces that were 20 karat  or above and weighed around 70-85 grams. One such necklace I saw was $5000. I took a good notice at what clothes the man was wearing. He had some old tennis shoes, and just a t-shirt with some basic jeans. I know judging a book by its cover is wrong but he did not appear to be ultra wealthy. You would not see this sort of buying back home in the states which is why this is absolutely stunning to any Westerner. I also saw numerous older women wearing traditional silk Chinese shirts with similar necklaces that looked to have cost around $2500, as I would look at their necklace and compare it to the one in the shop (as they are all pretty easy to look at and compare because they are sort of standardized here).
Next time I go, I will take photos for you and you can post them on SilverDoctors… Furthermore, I was shoved numerous times out of the way by 40 year old women who wanted to get a gander at the newest necklaces and bracelets….. I am not a big guy but I am a young adult male nonetheless and these are women that are shoving me out of the way because they are trying to buy some gold and silver. This just gives you the idea the sort of frenzy that is going on over here. I won’t make price predictions, but I do expect silver and gold to go higher from here over the next 3 weeks, with a small correction by the end of February.
Here is a breakdown on the prices:
The gold at most of these small silver gold stores were selling anywhere between 388-420 yuan per gram (or $62.47 to $67.63 per gram, using a 6.21 exchange rate). With a current gold spot of $1685, the per gram cost is $54.18. China’s retail precious metals scene is currently putting only a 15% to 25% premium above spot prices. This of course is higher than premiums in the west but relative to Chinese premiums, this is pretty cheap. All of the PM retail shops in China lower the premiums significantly leading up to the Chinese New Year (Feb 9) in order to attract more buyers. I’ve witnessed premiums well above 50% a couple months ago for gold.
The silver was anywhere between 8.8 yuan to 20 yuan per gram (depending on the significance of the artwork, and other factors). However, there were .999 50 gram art bars that were selling for 10 yuan per gram or 500 yuan per bar. These art bars have each of the 12 zodiac animals on them. So, one 50 gram art bar is $80.51 or $1.61 per gram…. whereas at the current spot price of $32 equals $1.02 per gram. So in other words, China has a street silver premium of 57% on a typical art bars…. If this 50 gram Chinese Zodiac art bar were to only weigh a troy ounce (31.1 gram) it would cost $50.07…. a much higher premium than the art bars you can buy at your local dealer, SD Bullion, retail shop, or on eBay.
Anyways, despite these high premiums, I have never seen such frenzied buying in my life before. I must take pictures and/or a video next time I go to the Carrefour in Beijing just to show everyone in the West what the mania stage will look like when it finally arrives in the states. In the meantime, I am going to take care of those bruises I received today from the 40+ year old women who shoved me out of their way. Cheers from Beijing.

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