Gold bulls received smashing news last week, when the World Gold Council predicted that Chinese demand for the metal will exceed that of India this year, which was previously the world's largest market.
Indian consumption had already been overtaken by China in the final quarter of last year, but that owed much to a drop in demand as India's economy faltered and the rupee fell in value, which impacted the local price of gold.
But strong sales over the Chinese New Year have firmed predictions of growing Chinese consumption, which rose 20% in 2011. Together, China and India now account for roughly half the world's gold demand, in both the investment and jewellery segments.
Few markets have such polarised bull and bear views as gold. Now, I hate investing in commodities. Everything hinges on knowledge of supply and demand, and the one certain fact is that there are a lot of people who have much better information than I do. It's not so much that I think of it as a mug's game, but rather that I know I'll be one of the mugs.
But the case for gold does impact one sector that I am interested in: gold miners. They could enjoy the fruits of any upside, but be more cushioned on the downside.
Trends in China are, indeed, good news for gold bulls.
Like just about everything else on the planet, demand is powered by the increasing wealth of the Chinese middle classes. With limited investment products in China, gold is liked as a hedge against the country's relatively high inflation. Property prices have gone into reverse, and real interest rates on bank deposits are negative. But gold also has a cultural significance, and is a popular gift at New Year when the new urban wealthy visit their home towns.
Bulls also point to a resurgence in central bank buying, especially from emerging market countries, as nations seek to build their reserves and diversify exposure to traditional haven currencies. Purchases by central banks soared nearly sixfold in 2011, with Russia, Thailand and Bolivia among those known to have bought.
Retail demand in Europe's biggest markets for gold, Germany and Switzerland, was also strong last year. Those who most fear uncontrolled inflation arising from quantitative easing or implosion of the eurozone are those who most appreciate gold's traditional function. Spikes in the gold price in 2010 and 2011 coincided with the European Central Bank's policy U-turn to buy eurozone bonds and then its purchase of Spanish and Italian debt.
But the bears point to gold apparently having lost its 'safe haven' status. Recent 'risk-off' reverses in stocks have been accompanied by a fall in gold, not least when multi-asset investors have liquidated gold holdings to meet margin calls.
Massive holdings in gold exchange-traded funds (ETFs) by hedge funds is a significant contributor to that phenomenon. Since their creation in 2004, ETFs have grown to become some of the largest holders of physical gold. But ETFs make purchases and sales much easier, so that gold has effectively become much more fungible with other investment classes. That has contributed to the rise in its volatility.
With gold having enjoyed a 10-year bull run, the bears see last year's corrections as foreshadowing its end.
What scares me most is how fast and far a fall could be. Gold fell 60% at the end of the long bull run in 1980, and drifted downwards for 20 years before the start of the last cycle. So, nervous of commodities anyway, I'm certainly not a buyer of the metal.
But the long-term boost to demand from Chinese buyers does support the case for gold miners.
They have underperformed gold itself over the past year, so have the potential to enjoy some catch-up. But with cash margins at today's prices -- up to $1,000 per troy ounce and the gold price around $1,700 per ounce -- there's headroom for a soft landing if the bears do have their day.
Miners might also benefit from the reverse of the ETF effect. One argument is that demand for their shares, which previously were a liquid and tradable proxy for gold itself, has been substituted by demand for gold ETFs.
If the volatility in gold now discourages appetite for the ETFs, some of that demand could find itself redirected back towards the miners.
And with plentiful cash flow from their current operations, some of the larger miners are boosting dividends. If that catches on, then interest in the sector, which traditionally is mean when it comes to dividends, could attract broader interest.
If the porcelain looks too expensive, buy the pottery!