India and China

These are the two behemoths of the future. Which one will predominate? The answer is given by an article today on gold consumption. China has just overtaken India as world's biggest gold consumer in 2011, an impossible feat at the beginning of the year.

The good news for Australia, and me, is that the pace of consumption in China is "accelerating". Instead of the Central Banks hoarding, it is the Chinese. They have too much cash and don't spend like the Yanks, Aussies or once upon a time, the Europeans. Chinese Yuan is tied up the USD which can be printed. Gold is not produced by a printing press.

China is currently the world largest producer of gold but it is consumed locally. They probably eat it! Australia, I think is number 2. South African mines are very deep and good grades are no longer the norm. As a value hedge, it is difficult to beat gold purely on historical facts.

For me, it is still gold sector that appeals. RB said phosphate and potash for food production as well. And India and China needs more coal. However, China has found huge deposits in Xinjiang (where the Muslim problem lies) and Mongolia is only next door. And China has the world's largest shale gas reserve, prospectively.

Go, ABU, Go! But it is NOT a producer yet....