Chinese people buy 'haven' gold

When the economy recovered slowly and real estate was in crisis, many Chinese people bought gold because they saw it as the last safe haven.

Caibai is one of the famous jewelry stores in Beijing, with a sign hanging outside “Since 1956”.

On the first floor, the store displays jewelry and gold items. Above, one floor is dedicated to gemstones and another floor specializes in selling jade. But on these days, the most crowded is the top floor.

Greeting buyers at the top of the scroll bar before entering this floor is a gold price chart, with a steadily increasing curve in recent months. Customers were all whispering. They are discreet people, observing for a long time before asking to buy. Many of them do not have large assets but only have modest savings.

Here, Caibai sells gold in a variety of weights, from small 1-30 gram coins with the image of a panda, certified by the central bank, to gold bars engraved with the 12 zodiac animals, weighing 50, 100 or 300 grams. .

A man named Lu asked the clerk if he could take a closer look at a small piece of gold. He admits to buying several pieces each year. “In the current context, this is the safest way to invest money,” Mr. Lu said. Salesperson Wang Anmei said more and more customers like Mr. Lu are coming to buy gold.

Gold bars at Caibai jewelry store in Beijing on August 6, 2019. Image: Reuters

According to data from the China Gold Association, consumers in this country bought 308.9 tons of gold in the first quarter, an increase of 5.9% over the same period in 2023. The attraction of gold caused diamond sales to plummet from last year to present. Last month, the hashtag “diamonds collapse when gold goes crazy” attracted nearly 100 million views on Chinese social networks.

Gary Ng, senior economist at Natixis Bank (France), said that Chinese consumers are looking for ways to preserve assets in the context of weak confidence. “Gold has the dual nature of consumption and investment, and it has better resale liquidity and price transparency than diamonds,” he said.

In the context of the world’s second largest economy still recovering slowlyAfter the pandemic and the real estate market crisis, gold is still an absolute safe haven for some people. “It’s reliable. People think it’s the best investment. They’re hesitant to invest. invest in stocks and real estate while gold continues to rise,” Wang explained.

For Chinese people, transferring money to invest abroad is very difficult. Domestically, the stock market is unstable, having suffered a worrying decline for retail investors last year, until there was a major intervention from state-owned investors to stabilize it at the end of January/ 2024, right before Lunar New Year.

Along with that, real estate prices are still unstable. Since the recession began in the third quarter of 2021, new and existing home prices in China have dropped 11%, according to JPMorgan. Real estate, which accounts for 70% of household assets, has long been considered low risk as the country continues to urbanize. However, investment in real estate decreased by 9.8% in the first 4 months of the year compared to the same period in 2023.

Due to doubts about the country’s economic trajectory, Chinese people flocked to gold, helping to push up the price of the precious metal. Not only people are concerned, the Chinese Central Bank added 225 tons of gold to its reserves last year, a record number since 1977. They have sought to reduce their holdings of US Treasury bonds and replace by regularly buying gold for reserves for 18 consecutive months, before announcing a stop because the price was too high last week.

At the Caibai store, the employee put on black gloves and carefully picked up the gold piece that the customer indicated to place on the scale, reporting a weight of 100 grams. To increase persuasion, the seller lists current international events.

These include the wars in Ukraine and Palestine, tensions over Iran and questions about upcoming decisions by the US Federal Reserve. “Everyone has heard of them,” said Wang Anmei.

Claiming to be an indecisive customer, Ms. Wang Guiping walked around the display counters for a while, hesitantly looking at the small gold pieces. She invested in stocks “but was unsuccessful because she had no expertise.”

She heard the media say gold is a safe haven asset, a new future for investors, so she sought advice from her friends and son. Her son invested some gold through his banking app, and she preferred something more tangible, like a small piece of gold.

“But I’m afraid it’s too late. If I buy when the price is at its peak, I will lose money again,” she said.

By Editor

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