China's deepening appetite to buy and horde gold certainly has a reason, maybe even a lot, that more than meets the naked eye.

In the third quarter of 2011, China surpassed India to become the world's largest consumer of gold. Apart from the continuing maddening global financial meltdown that has spurred central bank buying of the yellow metal to also go overboard compared in the recent years, the gold-buying trend in the third quarter of last year pointed to the country's hype over its yearly Chinese New Year celebration.

Gordon Chang, author of The Coming Collapse of China and a columnist for Forbes.com, surmised the Chinese federal government may not have been utterly honest as to how its economy has really been performing, prompting its citizens to purchase ever more the precious metal.

"I think largely there is a concern of inflation which is much worse than Beijing is willing to admit. For in December they said the inflation rate was 4.1 per cent for consumer goods. It's probably double that, and the food inflation is much higher," Mr Chang said in an interview with Forbes.com.

Gold sales in the world's second-largest economy jumped substantially in 2010, prompted by investors seeking shelter from inflation. However, even as inflation has already cooled to its present 4.1 per cent, the gold craze in China continued. And still persists.

Mr Chang said that with China's jumping imports of gold in the previous months, much of it has been consumer driven. "There could have been an increase in wealth and people want to buy gold with their money," he said.

But the Chinese have been buying gold since time immemorial, and that should not be a surprise. What is troubling, if at all, is the seemingly panic-buying of China of the precious raw commodity.

China is rich, and wealth has been available for awhile. "But the question is why are they buying gold in these quantities right now?" Mr Chang asked.

Simply put, Mr Chang said China's economy is slowing, and going down.

"I think the Chinese economy hit an inflection point probably in September and what we're seeing now is slowing growth. But we're also seeing plunging property prices, declining industrial production, and troubles throughout China's export belt. I think it's indicative of a new super cycle (but) this time the super cycle is not up, but it's down," he said.

"I think people are really worried about that and now that they've got the ability to buy gold, they are buying gold in big quantities and I think that's a sign of concern on the part of local Chinese as to what's going on in China."

Mr Chang offered the theory that China is bringing into the country resource commodities far higher and bigger in numbers and stockpiling them to conceal a slowdown in consumer product imports.

"Beijing is stockpiling commodities like crude oil, copper, iron ore, in order to boost its import numbers... and massage its trade numbers," Mr Chang said.

China may be importing now more commodities compared over 2010, but are still not huge in percentage terms volume growth if compared versus 2009 imports. Though its economy is slowing down, China's appetite for raw materials will continue on. And this will offer a strong support to commodities in 2012.

And because China, as a country, worried over the fiscal health of the world, most especially over its major trading partner, the eurozone, it will continue to scour and buy all the gold it could get its hands on.

"For China I think there is also a concern about the general direction in the economy, but if you step back and look at the world, I believe Europe is going to trigger a crisis probably this year," he said.

"We're going to see problems that are going to ripple throughout North America and Asia, and so in times of crisis you're going see people go into precious metals, and so gold is certainly going to benefit from that. I think gold is probably going to move upward."