China, the worlds largest producer and consumer of gold, may be expanding its presence in the international gold market. According to a new story by the Wall Street Journal, low gold prices in recent years have driven a new wave of international gold asset acquisitions by Chinese companies.
Sprott Asset Management CEO Peter Grosskopf says Chinas five or six gold companies are all better-positioned financially than their North American counterparts.
I have been in touch with all of them, and they all have plans for increasing assets overseas, Grosskopf says.
Gold isnt the only international asset that Chinese companies have shown a growing interest in recently. Chinese companies have already acquired a combined $92 billion in international assets so far in 2016. That total doesnt include Anbang Insurance Groups recently-withdrawn $14 billion bid for Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT), which would have been the largest Chinese takeover of a U.S. company in history.
China already produces an estimated 1,000 tons of gold annually and consumes around 450 tons. Chinas gold production accounts for about 30 percent of the worlds demand.
So far this year the SPDR Gold Trust (ETF) (NYSE:GLD) is up 18.1 percent.
Disclosure: the author holds no position in the stocks mentioned.
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