Of course this development won't make the mainstream media but according to UBS this morning, China is on course to overtake India as the largest buyer of physical gold.

Regards - VHF

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Gold Gets Physical

UBS Metals Daily

March 26, 2010 8:04:33 AM

Author: Edel Tully

...In the short term, now that the risk of an imminent Greek default has eased, it presents an opportunity for some positive sentiment to be sent gold's way. Over the past week as the yellow metal traded below $1100, the physical market stepped up to the plate as investor's bailed. Coin demand has also picked up. However, it is not an Indian physical story that we report today. Instead, it is from China where we have noticed the strongest physical response and indeed the most activity from this region since the weeks leading up to the Lunar New Year. We monitor the Chinese physical appetite from our own flows to the region but we also pay attention to turnover of the two physically settled gold contracts on the Shanghai Gold Exchange (SGE). For example, for the XAU9999 contract, turnover yesterday was the highest recorded since Feb 5, which also represented a record volume since this contract was launched in late 2002. Chinese physical demand is much more apparent this year than last and this is quite obvious from year to date volume of the XAU9999 contract on the SGE where turnover is 150% greater than the same period of 2009. If this pace continues, China could quite likely replace India as the largest physical market in 2010.