FX.co ★ Chinese gold tails off due to low demand

Chinese gold remains relatively undervalued compared to other international prices, the reason for which is the historic low demand for the asset, which accounts for 65% of gold consumption.

According to reports, China is currently stocking up on other base metals, as a result of which gold imports have fallen to a shocking low level.

"The Chinese government seems to be accumulating strategic reserves of certain metals while they can still import them unhindered," commented Samson Li, senior analyst at Thomson Reuters.

"Although they are importing metals to build up strategic reserves, I unfortunately do not think that China is importing gold at this stage," Li added.

Meanwhile, the rapid rise of gold and silver prices have shifted the value of mining companies and increased their budgets. However, the industry has not seen its full potential yet, as restrictions prevent silver companies from generating free cash flow the way they should be.

"From an industry perspective, we are seeing a doubling and tripling of market capitalization, especially for researchers and developers who are not yet manufacturers." said Darren Blasutti, CEO of Americas Gold and Silver.

"The exploration budgets of producers have increased due to rising metal prices," he noted.

Americas Gold and Silver plans to increase the production of precious metals to 500% by 2021.