Gold has become more than a fashion choice for a lot of Chinese Gen Z
We might be living in different times and a lot of things have changed but something like gold as an investment hasn’t changed even amongst the younger generation. According to the China Gold Association, the consumption of gold has been on the rise from pre-pandemic levels. Chinese Millenials are the best consumers. They buy gold for both investment and fashion reasons.
Chinese have a strong affinity for gold. The earliest traces of gold In china dates back to 3,000 and were found in one of the royal tombs. Gold is also part of Chinese culture. Like in most western cultures gold represents wealth and good fortune. Yellow gold represents Ying and Yang, when paired with red it symbolizes it represents freedom from worldly care. This is why it is used in Buddhism; Buddhist temples incorporate it in their temples and they represent the metal by incorporating yellow in Buddhist monk garments.
According to the World Gold Council, the demand for gold jewellery in China rose by 32% and reached 157 tonnes in 2021. This is thanks to low prices and the changing fashions amongst Chinese millennials.
With most of the gold going to jewellery markets, jewellery brands have gotten onto the bandwagon. They have incorporated the trend in their designs. Most Chinese customers would buy gold pieces with animals depicting their zodiac signs. These weren’t pieces that were flashed around because traditionally, these were usually attached to a red hand strap, now jewelers are redesigning the straps and making these more fashionable to wear in the open. Zodiac animals are important to the Chinese culture and when cast in gold, they symbolize luck and fortune. These jewellery pieces are selling out like hotcakes.
Gold might be popular in China as jewellery, it also has a significant impact as an investment asset and functions as an alternative asset to the Chinese currency, the Yuan. This is because the Chinese government capital controls are strict on currency exchange limiting the options that Chinese investors have when it comes to investing outside the country. Gold makes this a little easy. For Chinese gold buyers, gold isn’t just a safe-haven investment, it is also a crucial asset for diversification. The Chinese government is not oblivious to this which is why there have been talks of China releasing gold ETSs.
The Chinese central bank has not been transparent about the gold it buys or trades which has led to a lot of speculation and discrepancies over the exact amount of gold the central bank is buying and selling. The secretive dealings of the People’s Bank of China make it hard to say how much gold flows into the country and what the gold is used for.
The fact that the Chinese government is taking gradual steps towards liberalizing the Yuan, means there will be a definite shift in how gold is traded. This could mean an expansion of how gold is used, this means the Chinese need for alternative uses of the yellow metal will not be going away any time soon especially as the younger generation are getting savvier about best practices in investments and are learning how gold a stable and risk-free asset like gold can provide long-term results.