By Jeff Nielson: In Part I, I alerted readers to the problem with using Western labels and Western analysis to analyze the gold markets of other nations - especially the two titans of the gold market: China and India. More specifically, I pointed out that breaking-down demand into the categories of "retail investment" and "jewelry" demand was both arbitrary and inaccurate. In fact, much of the gold/silver acquired under both of those categories simply represents "savings", rather than "investment" or the mere purchase of a luxury good (i.e. jewelry). Because of this inaccurate analysis, I suggested that (Western) analysts will likely consistently underestimate long-term demand, while overestimating the amount of "scrap" bullion which would/will return to the market.
While much of this analysis applies to both India and China, there are clearly important differences in these two, critical markets for precious metals. Previously, I pointed out that China had only recently removed/relaxed policies which severely restricted the ownership of precious metals. An astute reader immediately provided me with two, important observations.....read on
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