Basic economics teaches us that if there is a limited supply of something and more and more people want it, then the price is bid up until enough of the prospective buyers can no longer afford it. For instance, if 100 people want to purchase a bag of wheat and there are only 50 bags of wheat available, then the bidding for the wheat will continue until 50 people quit bidding and the wheat goes to the remaining 50.

The same principle holds true in the gold market. Increased demand makes prices rise. With that in mind, consider the following excert from Mineweb.

In a scheme which has now been running for a full year, the Indian Post Office has been a conduit for the sale of specially minted gold coins. The scheme appears to have been promulgated by the World Gold Council and was put out to tender by the India Post, with the contract won by Reliance Money Limited, a division of Reliance Capital, one of India's largest financial services companies.

India Post points out that the Indian Economy is one of the fastest growing economies of the world., with per capita income rising consistently. Purchasing of gold, it points out, is an age-old tradition and even religious too.

Most other Indian banks have similar schemes being pushed out to market small denomination coins and bars.

Recent reports also suggest that HDFC bank is looking at selling silver too in a similar manner.
So it is not only Chinese state institutions which are promoting the sale of precious metals as an investment, but Indian ones too, meaning THE WORLD'S TWO LARGEST CONSUMERS OF PRECIOUS METALS BOTH HAVE ONGOING MARKETING IN PLACE TO PERSUADE INVESTORS TO BUY BULLION.

Limited supply plus increasing demand equals higher prices.