'Dama' women behind much of China's current gold demand
China's gold consumption soared 41.36% in 2013, aided by bargain-hunting, middle-aged women.
Posted: Wednesday , 12 Feb 2014
MUMBAI (MINEWEB) -
Massive gold purchases by Chinese `dama' investors - bargain-hunting, middle-aged women - may have propelled China past India as the largest gold consuming country in the world this year.
According to the Xinhua News Agency, the surge in gold demand seen in China was helped by frenzied purchases by these `damas', who were eager to chase cheap deals.
The Chinese language Shanghai Securities Journal too has credited `damas' with driving China's gold market and the 28% global fluctuation in gold prices over the past 12 months.
this group consisting mainly of married women between 40 and 60 years of age, grabbed the attention of the world for the first time in 2013. The Wall Street Journal specially created the term `dama' to showcase the urgency of the Chinese ladies in the gold market.
In the wake of the gold price slump in the international gold market, Chinese investors, mostly mothers, spent around 100 billion yuan to buy 300 tonnes of gold within 10 days.
Gold traders in Beijing's markets said many of the regular buyers are in their 50s and 60s and are desperate to invest, given that gold prices have fallen so sharply.
According to statistics released by the China Gold Association on February 12, China's gold consumption for the first time exceeded 1,000 tonnes to reach 1,176.4 tonnes in 2013, a year on year increase of 41.4%. Gold consumption in 2012 was 832.2 tonnes.
Data showed that even as the gold output and consumption in China have set new records, the gap between consumption and output has grown even wider. In the first three quarters of 2013, China's demand for gold totalled 779.6 tonnes, as compared with India's 714.7 tonnes, according to figures previously released by the World Gold Council.
Though the majority of China's rising demand for gold stems from jewellery and gold consumption, which rose by 43.5% and 56.6% last year respectively, the fall in gold prices stirred a spending spree among Chinese consumers.
In the second quarter of 2013, when global gold prices dropped from $1,600 to $1,400, frantic purchases by Chinese damas caused a high profile gold shortage. Again, in the fourth quarter of 2013, another buying frenzy by damas dramatically lifted the annual consumption level.
Incidentally in India, gold consumption dropped by 32% year on year during the third quarter of 2013, with the import restrictions imposed by the Indian government.
In China, more than 80% of gold jewellery is made from 24 carat gold. When international gold prices fell from an opening level of $1,676 to as low as $1,196 during the year, and experienced overall fluctuations of 28.63%, the worst in more than 30 years, the damas stepped in.
They lined up outside gold shops both in mainland China and in Hong Kong, to buy gold jewellery, gold coins and gold bars at record low prices.