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China is panicking.

Rampant inflation is driving Chinese consumers to buy gold on a massive scale…

In fact China is already set to buy almost half of all the gold that’ll be mined this year.

You read that right: The Chinese may buy nearly 50% of total world gold production in 2011.

This incredible demand will no doubt put significant strain on global supplies.

Today I want to talk about how this soaring demand may be the catalyst that pushes gold prices over the $1,500 level in as little as a few weeks.

Over 1.3 billion inflation-nervous Chinese eye gold

In January 2010, China recorded an inflation rate of 1.5%. But just 12 months later, the rate of Chinese inflation has climbed to 4.9%.

Rising inflation has sent food and property prices in China skyrocketing.

The price of food in China, for instance, has increased 10.3% on an annual basis; grain saw an increase of 15.1% and fruit is up 34.8% since January of last year:

China’s rising inflation stems from the $585 billion economic stimulus package its leaders pushed through in the depths of the financial crisis two years ago.

In dollar terms, China’s stimulus was much smaller than the $800 billion package the U.S. created. But it was much larger as a percentage of the Read more…