"...the next great bull markets of our investment lifetime and the greatest investment story of our lifetime (the Money Migration) are taking place in Asia." - Dan Denning, Daily Reckoning, 9-2-2004

Why is China so important today & on the investment community’s radar screens?

The following text are excerpts from an article by Stewart Bailey titled:

“Has China Changed the Commodity Game?,” MineWeb, 3-18-2004

“Mike Bedford, a mining analyst at independent brokerage Barnard Jacobs Mellet, believes rampant Chinese demand for metals will continue to grow, keeping commodity prices buoyant for at least the next four years, and perhaps even longer. Bedford says the China phenomenon, as it is widely being called, could result in a break from the traditional commodity cycle and place metals on the ground floor of a new ‘secular’ boom.”

“Nevertheless, if Bedford is right about China – and there is a growing body of economic evidence and statistics to suggest that he may be – metal prices will continue their upward march. “

“…demographic shifts in China should provide more than enough impetus to keep the metal boom going. China is currently only 40% urbanised, a figure that will climb to 60 percent inside of 20 years. That means an influx of some 300 million people into Chinese cities, which in turn means massive investment not only in infrastructure, but also in consumer goods as the Chinese become more affluent.”

”Morgan Stanley says the economy doubles every ten years, while exports double every five years. Production growth, too, is startling.”

“According to metals analyst Martin Wolf, one of the commodity market’s more sober commentators, the Chinese government has targeted a quadrupling in gross domestic product over the next two decades.”

“As the increased affluence drives metal demand, he says prices will remain high as new supply continues to lag behind. The main reason for that supply squeeze is the dearth of spending on exploration, prompted by a metal price bear market of longer than 20 years.”

“The rumours of Chinese investment demand in bullion may be overcooked, but if they do pan out, the benefit for the gold market as a whole could be huge, though.”

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