Spring Festival gold rush
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With the clock ticking down to Spring Festival - one of the two major annual holidays in China known as a "Golden Week" - many Chinese people have been flocking to jewelry stores to snap up valuable trinkets for friends and relatives.
A 40-year-old shopper surnamed Li is typical of customers making the Spring Festival holiday, which includes the celebration of the lunar new year, into a golden time for goldsmiths and jewelry stores. Li bought three gold Buddhas for more than 100,000 yuan ($15,000) from Caibai Ornaments Store, one of the country's largest gold retailers.
"I want to place two of the Buddhas at home in the hope that they will bring me good luck in investments," said Li, an entrepreneur from Hebei province. "The other one is a lunar new year gift for my mother."
He said giving gold is much better than alternatives such as cash because hard currency can become less valuable over time due to inflation but gold offers a beautiful way to maintain and grow a family's fortune.
The consumer price index hit a 28-month high in November when it rose by 5.1 percent before easing to 4.6 percent in December.
The rise in inflation was mirrored by a peak in people's appetite for gold.
Zhang Bingnan, secretary-general of the China Gold Association, told China Daily on Friday that the total use of gold rose almost 20 percent to 510 tons last year, largely because people wanted inflation-proof investments.
"The amount of gold used by jewelers and industry has grown steadily while gold bought for investment has grown quickly," he said.
China has been the world's second-largest buyer of gold after India for the past three years and top producer of the valuable metal for the past four years. In 2010, the nation produced 340 tons of gold, a rise of 8.6 percent on the year before.
"Chinese consumers' appetite for gold has been stronger this year than in previous years," said Wang Chunli, general manager of Beijing Caibai Ornaments Store.
"The demand for gold jewelry and bullion has been phenomenal ahead of the lunar new year holiday. "
The store saw sales hit 7.2 billion yuan in 2010, a 60 percent rise on the previous year. Daily sales ahead of Spring Festival often exceeded 100 million yuan.
"Chinese New Year is the time of year when Chinese people give gifts, usually money in red envelopes," said Wang. "This year, gold is popular mainly because it does not depreciate."
But Wang Lixin, of the China office of the World Gold Council, said the trend has been building for a while.
"Gold has been hot since last year," said Wang Lixin. "Coupled with the slump in the stock market and the property price, it has become the best investment."
The strong desire for gold among Chinese consumers has triggered a drive to find more reserves to meet demand.
According to Zhang, the government invested 500 million yuan on exploration for new deposits of gold in the past five years.
Investment activity in China remains high with physical gold at the Shanghai Gold Exchange totaling 6,046 tons in 2010, up 28.48 percent on the year before.
Wang Lixin said demand is likely to keep growing, given China's huge population and its increasing spending power.
