By David Lew
Garlic, the white, spicy bulb among commodities, is in the news these days thanks to China. Garlic is the darling for investors, traders, farmers, exporters and retail merchants across China. If commodities are big investment propositions in the booming Chinese market, garlic takes the top honour as the best investment asset! No wonder, investment pundits like Jim Rogers have been pouring in money into agricultural commodities in China.

Now, let us come to the point. Why is garlic suddenly the hottest commodity in China? Why is it that investors are comparing garlic to gold? For time immemorial, Gold has been regarded as the best investment asset. Now, suddenly, people are comparing garlic—the spicy, pungent stuff you put it in your daily cooking—with gold!

Yes, these days, news agencies and newspapers are flooded with reports that garlic has beaten gold as the best investment asset in China! Garlic outperforming gold? Hard to believe. But facts are interesting.

Look at some interesting facts here:

Garlic prices have shot up by more than 50 per cent in the last few months in China that there is an acute supply vs. demand crisis on the commodity. Garlic is regarded as the best commodity with lots of medicinal properties in China. So when swine flu hit several countries across the world a few months back, millions of Chinese reposed their faith in garlic that supposedly can fight prevent the viral attack.

According to Zoe Chace, a farmer who has made lots of money out of garlic, China produces more garlic than any country in the world. China is the biggest producer of garlic. “Last year, when the global economy collapsed, the garlic market collapsed. Nobody was buying. So this year, garlic farmers in China planted about 50 percent less garlic. And think about that in terms of China, that's a lot less garlic,” he told The Economist.

“People in China are very, very worried about swine flu. It's a big deal. You know how some people think that garlic can keep you from getting sick? In China, some schools have started ordering garlic by the truckload,” Chace says.

“So some smart people saw where this garlic thing was headed. Remember the banks are flush with cash. People go and they get a loan and they buy up as much garlic as they possibly can. Then they rent these warehouses and just stash garlic in it, and then they sit on it. They just sit and they wait for the price to rise, and garlic, you know, keeps basically.”

Chace further talks about a garlic rush, saying that there is a frenzy in garlic farming across Jinxiang province, and this garlic frenzy is turning into some kind of Gold rush.

“Yes, a garlic rush is on. People are trying to jump on this train before it leaves the station. And some banks in Jinxiang are actually running out of money. They can't keep up,” he added.

Chace obviously says that the current market price of garlic is on a bubble that could burst at any time. Remember, some days back, the Chinese central bank also said the same thing about gold, warning that the current, booming price of the yellow metal is on a bubble that could burst any day!

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