Chinese people are turning to gold as a safe haven amidst concerns about the real estate market, the overall economy, and the potential actions of Washington.
Commentary
In China, gold is shining brighter than ever before.
Instead of buying jewelry, there has been a significant increase in purchases of gold bars and coins as people seek to protect their wealth during uncertain times. With the continuous property crisis affecting real estate values, economic struggles, anticipated hostility from the West towards Chinese trade, and doubts about effective policies from Beijing, it is no surprise that Chinese individuals are turning to gold.
Despite the near-record high price of gold reaching over $2,800 per ounce, Chinese purchases of gold jewelry have decreased by 28 percent in the first three quarters of 2024 compared to the same period in 2023. However, purchases of gold bars and coins have surged by 27 percent during the same period, with anecdotal evidence suggesting a further acceleration in buying rates. Retail demand for gold bars has increased to the point where inventories are selling out and prices are rising.
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The uncertain geopolitical landscape further motivates Chinese individuals to seek refuge in gold. With ongoing conflicts in Europe and the Middle East and potential shifts in trade relations with major economies like the United States, China’s wealth is at risk. The global trend towards de-dollarization has also prompted central banks to increase their gold reserves, adding to the appeal of gold as a safe investment.
It remains uncertain whether Beijing can effectively address the economic and financial challenges facing the nation. Given past experiences, it is unlikely that adequate solutions will be implemented. Therefore, doubts about China’s economic and financial stability are likely to persist. As policy clarity in the U.S. and geopolitical situations unfolds over the coming months, Chinese individuals are expected to continue their flight into gold as a reliable asset.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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