- Inflation is on the rise in China, reaching 2.8% in August 2019, the highest in 18 months; leading economists expect it to rise further by the end of the year
- African swine flu has wiped out a third of China’s pig livestock since last August, contributing substantially to the rising inflation
- Looking back at history, when inflation rose above 3% the nominal return of the local gold price has averaged 17%
Gold and inflation in China
Gold is well known for its inflation hedging properties. During periods of higher inflation – higher than 3% – the gold price has risen in both the US and the UK, by an average of 15% and 12% respectively.1
And it’s the same story in China. During the past 17 years, the annual nominal return of Au9999 – the physical gold contract traded on Shanghai Gold Exchange since 2002 – averaged 17% during years when inflation rose above 3%.2