I think its a mistake to underestimate these two factors in the current financial/political scene.
Gold Buying in China Jumps as Inflation Flares, Boosting Demand, UBS Says
Kim Kyoungwha, On Wednesday March 2, 2011, 4:28 am EST
Gold purchases in China, the world’s largest producer, climbed to 200 metric tons in the first two months of 2011 as faster inflation boosted consumer demand, according to UBS AG, which said the price may gain to $1,500.
“China is the big buyer,” Peter Hickson, global commodities strategist at Switzerland’s largest bank, said by phone yesterday, without giving a comparable figure for 2010. The estimate for the two-month period compares with full-year consumer demand from China of 579.5 tons for last year, according to the World Gold Council, a producer-funded group.
Bullion, which rallied 30 percent last year, surged to a record yesterday as uprisings in the Middle East, quickening inflation and currency debasement boosted global demand. China’s consumer prices rose 4.9 percent in January from a year earlier, exceeding policy makers’ 4 percent ceiling for a fourth month.
“Chinese interest is huge,” said Peter Tse, Hong Kong- based head of precious metals at Bank of Nova Scotia. “Demand for physical gold and imports has increased substantially” due to the Lunar New Year holiday, Tse said today, referring to the week-long break that began Feb. 2.
China’s population has grown to 1.341 billion as of 2010
Asia Bizz: China still has the largest population on Earth, and the figure has mounted to 1.341 billion people. Since the year 2009, the population in China has grown only by 6.3 million, and this is really impressive for country, as it is working hard to control its population growth . China takes out a census once in ten years and final figure will be released in the month of April.