Gold Rush In China, a combination of tradition and investment is pushing prices higher

Caishikou is a neighborhood in central Beijing, traditional, continuous and also modern, with the full commercial display of Chinese dynamism. Large surfaces from different eras in many corners and one of them is not particularly different from any other — a faux marble facade, a large steel and glass structure, large advertising posters and colorful lighting — Intended for jewelry, especially gold.

Many commercial areas in China, due to oversupply, have become empty, without any attraction for consumers. The Kaishiko Gold Market is bustling with activity for many hours a day.

As such, positions dedicated to selling gold have become one in recent months A true pilgrimage place for many families Chinese women are looking to invest savings accumulated in years of pandemic quarantine.

It was a long period in which they could not spend on anything. Now the crisis is going out the window and you have to avoid risks: it is better to put those savings in safe values.

What can be found there?

The offer in the shop windows is very diverse: from bracelets and earrings to large decorative items for wealthier families.

It is only suitable for those who They can buy numbers of pure gold, Like a three-masted ship, or, improbably, a life-sized white cabbage, the symbol of the winter vegetable for meals in Chinese households.

Golden white cabbage, one of the displays at Kaishiko market (3Cat/Francesc Serra)

It is paid at the box office and with a voucher you can collect what is considered an investment, an investment that offers more guarantees. Now that the real estate sector has declined The stock market and currencies are not stable. All this in a complex international environment, in light of the wars in Ukraine and Gaza and the growing competition between China and the United States.

Imitation and investment affect the price

Fu Dongdong, in his thirties, arrives with his husband in Kaishikou with the aim of buying a piece of gold. A year ago they had a baby and on their first birthday they see an opportunity to celebrate by investing a gift.

“It's a Chinese tradition. When these creatures turn one, we have to buy them something in gold. It's the key to longevity. That's why I'm going to buy him a bracelet with two pieces of gold.”

In other words, a Chinese tradition, but also a safe investment because, as Dongdong concludes: “Gold is in turbulent times, as the saying goes, right? Today we can see that there is war in many countries, and it can be chaos.”

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Because of the Chinese tradition of buying gold and because of the available opportunity, the truth is that the increase in demand in the People’s Republic, during the year 2023 and the first months of this year 2024, It has led to higher prices everywhere Thus making the investment more profitable.

Vicki Liang is an investment advisor in a country with a turbulent history, where families are looking to secure as much money and profitability as possible.

Why the “gold rush” in China? Very easy, Vicky Liang sums up:

“If you buy gold or if you invest in the gold market, maybe you can make a profit of 4% or 5% a year, but if you go to the stock market, now in China you may lose 5 to 10%.”

Follow the quote to the minute

In shopping malls, such as the one on the fourth floor of Caishikou Shopping Mall, you can follow the development of prices in real time on the screen.

Agents did not reveal how long the rise is expected to continue. Someone confirms this Only the gods know the evolution of the price of gold.

In the absence of the ability to invoke heaven in such an irreverent material matter as buying gold by weight, we have to rely on the price per gram specified in all the shops in the mall. A few weeks ago, a gram of gold was sold at 648 yuan, or about 82 euros.

Calculating the price of parts is as simple as Multiply the weight by the cost per gram. Young, middle-aged and retired Chinese people sit in shop windows, where they can count the astronomical sums to be spent, and may soon make a profit.

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Without going any further, a gram, which a few weeks ago was priced at 648 yuan, is now available in some markets. It reached the mark of 700 yuan, 91 euros. This means a 14% return in just weeks.

Vicky Liang warns that gold may not grow as it has in recent months, but she believes that with some ups and downs, It will maintain its weight as a shelter value In turbulent times.

Beijing's Mecca Golden Gate, Kaishikou Market (3Cat/Francesc Serra)

What is behind buying gold?

Times are actually more turbulent than they seem, in a country like China where censorship and an obsession with appearances – the concept of not losing face – It makes it very difficult to recognize the real situation.

Those who were not involved in the bursting of the real estate bubble or the fall of the stock market and decided to put their money in the safe haven represented by gold also face some risks.

In addition to those who have money to invest, buying gold, as a tradition, occupies many retirees and middle-class residents. Many mothers buy gold for their first birthday and continue to acquire more as their children grow older. The generation that created the Chinese miracle wants to benefit from it With these investments, we can call it an anthill, at the end of the years.

An estimated 11.7% of middle-class households in China chose it Gold was the number one financial product last yearAccording to an independent industry report cited by Hong Kong's English-language South China Morning Post.

What's more, the study says, nearly 59% of Generation Z — people born roughly between the end of the 1990s and 2010 — have plans to buy gold. They are young people who, in many cases, Suffocated by a life tightly controlled by the family and the systemThey suggest leaving China and settling abroad. They can do this thanks to the returns on actual investments made by their parents. And gold, after all, you can always take with you wherever you go in the form of a necklace, bracelet, ring or earrings.

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Gold is sold in Caichico in all forms, from the smallest to the largest (3Cat/Francesc Serra)

Danger? Tricks

As a result, and since it could not be otherwise, this gold rush also gave rise to fraud networks.

This March, according to the local press, it is one of the most popular gold selling franchises He was denounced for deceiving about seventy investors More than 60 kilos of gold.

always According to official Chinese mediaCases have been discovered in which supposedly pure gold contained a significant portion of silver and rhenium or even It held only 10% of the precious metal.

To avoid being deceived, Chinese households now see gold as the only alternative, and this is unlikely to change until the real estate sector completely hits the bottom and begins to recover.

I leave Caishikou Shopping Center after 9pm. The frenetic activity at the counters has slowed a bit, but there is still an old man arriving with his net around his neck. You know, Chinese tradition says, gold and longevity…

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