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The Chinese economy has been well publicised of late, after a tumultuous 2015 and with increased volatility marking the start of 2016 trading. All thoughts of the economy will be on hold in early February however, when Chinese New Year is celebrated, on Monday 8th.
This year is the Year of the Monkey and the Chinese will mark the celebration with the usual mixture of gifts, holiday, family reunions and public celebrations.
Gold plays a very traditional role in Chinese New Year and features in many families celebrations, in one way or another. You can join in the tradition of Chinese New Year yourself with our options for buying gold, whether for your own investment or as a gift.
Gold is considered a symbol of wealth and prosperity within China, which means you can rarely go wrong with giving it as a gift on big occasions. Having said that, the Chinese consider gifts such as necklaces to be the symbol of an intimate relationship, so take care youre giving the right gift to the right person!
Red envelopes are a symbol of Chinese New Year and, of course, they contain money! No gold included unfortunately (excluding the lettering, see below), but the envelopes usually contain crisp new monetary notes. Numerical amounts are important. The Chinese will never give an amount ending in 4 (which has connotations of death), but frequently give amounts ending in 8 or 9 (fortune and longevity).
Red may be the colour of Chinese New Year (specifically, this year, its the Red Fire Monkey) but the red is traditionally emphasised via gold lettering. To complement the lettering, firecrackers and strips of red paper are decorated with gold symbols, which typically form spring couplets of four chinese characters, known as Hui Chun.
However, Chinas relationship with gold goes far beyond gift giving and decoration at New Year. The worlds second largest economy, by GDP, is intrinsically linked to gold around the world, in a variety of key ways.
2013 saw China become the largest, global purchaser of gold and experts predict that the Chinese appetite for gold is on the rise. However, India marginally wrestled the crown back from China in 2015 to regain its top spot. By 2017, its predicted that China will collectively be purchasing 1,350 tonnes of gold, up from the 2014 level of 1,132 tonnes, so its expected the top consumer crown may switch again.
China produces more of the worlds gold than any other nation
South Africa was, for many years, the worlds leading gold producer, but recently China and other countries have surpassed South Africas output. In 2014, China was the leading gold miner, extracting 450 tonnes of the global total of 2,860. Australia, in second place, produced 270 tonnes.
As mentioned, China is the worlds second largest economy by GDP which, as an economic measure, can impact gold in a number of ways. Debt to GDP, for example, is a common measure of strength in an economy and, over time, the measure has been shown to impact the gold price.
As ever, gold is a safe haven for investors and a recommended option for balancing & securing your investments. In times of uncertainty, as more investors choose gold, the price has historically risen.
If youd like to find out more or celebrate Chinese New Year by purchasing some gold, then you can download our free Guide to Investing in Gold and Silver, simply by clicking here. Or get in touch directly on 020 7060 9992.
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.