Last year, China’s gold consumption exceeded 1,000 tons, a year-on-year increase of 8.78%
Around the Spring Festival is the traditional peak season for gold sales. The gold sales counters in major shopping malls welcome waves of customers. Gold jewelry is bought as gifts for family members, gold bars are purchased for investment, and young people are saving "golden beans". Gold consumption is booming.
The China Gold Association revealed that in 2023, national gold consumption will be 1,089.69 tons, a year-on-year increase of 8.78%. The "Global Gold Demand Trend Report" recently released by the World Gold Council shows that China's domestic gold jewelry consumption will reach 282 billion yuan in 2023, a record high, and it is predicted that gold consumer demand will remain strong in 2024.
Gold consumer investment demand heats up
At the beginning of 2024, a "Chinese Golden New Year Exclusive Exhibition" was held in Shuibei, Shenzhen, the largest gold and jewelry trading center in China. More than 1,000 franchisee representatives, 8 China Gold Jewelry Direct Sales System Enterprises, and all 31 Chinese Gold suppliers participate in the exhibition. The first-ever Chinese gold-specific product booth has achieved sales of nearly 2 tons of new products, reflecting the “good start” to China’s gold consumption in the New Year.
During the Spring Festival holiday, at Caishikou Department Store in Beijing, there was an endless stream of consumers buying gold, and there was a long queue of customers at the cashier. "My friend's child has just turned one month old. This time I plan to buy a small gold lock for her baby. I will also look at gold products such as small gold bars. If there is one with a suitable price, I will buy some for my child to save." The young lady checking the gold jewelry at the counter told reporters.
According to sales staff, the Spring Festival holiday has always been the prime sales season. Recently, gold jewelry with the Year of the Dragon zodiac sign has become popular, and the rising gold price trend cannot stop consumers' enthusiasm for purchasing. "Gold prices are at a high point. Although investment may not be the best time, it is also a good tool for savings and hedging."
Data released by the China Gold Association supports the boom in gold consumption: in 2023, national gold consumption will be 1,089.69 tons, a year-on-year increase of 8.78%. Among them, the consumption of gold jewelry was 706.48 tons, a year-on-year increase of 7.97%; the consumption of gold bars and gold coins was 299.6 tons, a year-on-year increase of 15.70%.
From the supply side, domestic raw gold output in 2023 will be 375.155 tons, a year-on-year increase of 0.84%, of which 297.258 tons of gold mined will be completed, and 77.897 tons of non-ferrous by-product gold will be completed. China imported raw materials and produced 144.134 tons of gold, a year-on-year increase of 14.59%.
Judging from price trends, international gold prices will fluctuate at high levels in 2023. Data from the China Gold Association shows that the closing price of Au9999 gold on the Shanghai Gold Exchange at the end of December 2023 was 479.59 yuan per gram, an increase of 16.69% from the opening price at the beginning of 2023, and the weighted average price for the year was 449.05 yuan per gram, an increase of 14.97% from the previous year. .
Judging from the performance of related companies, the unaudited main operating data released by Chow Tai Fook for the three months ended December 31, 2023 showed that the company's overall retail value increased by 46.1% year-on-year during the period. Zhou Dasheng issued an announcement stating that as of December 31, 2023, the company's total number of stores was 5,106, including 331 self-operated stores and 4,775 franchise stores; a net opening of 490 stores in 2023 exceeded the annual net increase target of 400 stores.
From the perspective of the entire consumer market category, behind the “gold buying craze” is the overall rise in gold, silver and jewelry consumption. Data released by the National Bureau of Statistics show that the total domestic retail sales of gold and silver jewelry will reach 331 billion yuan in 2023, a year-on-year increase of 13.3%, and the growth rate ranks first among the commodity retail sub-categories.
In addition, investors are becoming more enthusiastic about investing in gold by purchasing gold ETFs (traded open-end index funds). In 2023, the size of domestic gold ETF holdings will grow steadily. As of the end of 2023, domestic gold ETF holdings were approximately 61.47 tons, an increase of 19.53% compared with the same period last year. From the perspective of net value performance, all 14 gold ETFs achieved positive returns, with annual performance returns reaching 15%-17%.
Zhang Yongtao, vice president and secretary-general of the China Gold Association, analyzed that the domestic consumer market will recover in 2023, and gold jewelry processing and retail companies will continue to innovate in the design of gold jewelry products, boosting China's gold jewelry consumer demand. At the same time, gold bars and gold coins with relatively low premiums are also favored by consumers with physical gold investment needs.
"Buying gold jewelry" and "buying gold beans" are popular
Faced with the continued rise in gold prices, "buying gold bars and buying gold jewelry" has become a new choice for many young consumers. Li Tao, a Beijing citizen born in the 1990s with relevant experience, told reporters that when he got married in early 2023, his "three golds" were buying from banks and buying from gold stores. "Generally speaking, consumers can first buy from banks, e-commerce platforms or even Shenzhen Shuibei Market." You buy high-purity gold bars and then entrust the gold shop to process them into jewelry according to your own design. The labor fee is charged by the gram, and you can watch the master making gold in the whole process. This process is quite participatory."
Is it more cost-effective to buy gold bars first and then go to a gold store to process them into jewelry than to buy gold jewelry directly? After trying it, many consumers said the answer is yes. "You only need to pay a small amount of extra labor fees when you buy it from a bank and have it made at a gold store. You don't have to pay for the brand premiums and expensive labor fees of big brands. It saves money than buying gold jewelry directly. In the end, I can save more than 30 yuan per gram. "Li Tao said.
Will it be more troublesome to "buy gold bars and make gold jewelry"? Does it mean higher risk?
“Everyone claims zero loss before weighing, but once it’s weighed, how do you calculate the small amount?” “Although the labor costs of small gold stores are low, the risks are also high.” “The process of designing styles, issuing invoices, and on-site supervision is too troublesome.” During the interview, there are also some Consumers are cautious. Li Tao said frankly that because he has relatives who are engaged in the gold and jewelry industry and are familiar with the gold shops that commission processing, he dared to hand it over to the processor with confidence. "Despite this, I didn't dare to make any mistakes during the whole process." Li Tao said.
In addition to "buying gold bars and making gold jewelry," many young people also choose to buy "golden beans" and "golden melon seeds" that weigh only a few grams for gold consumption and savings.
"The price of gold is rising, young people want to invest, but they cannot afford big gold bars, so saving gold beans is just right." Zhou Jing, who has been buying gold beans on and off for more than a year, said that gold beans have the advantages of low purchase threshold and low average premium. You can cultivate your personal savings habit, "spend a few hundred yuan every month and buy a little from time to time. You have already saved a small jar, which can be easily repurchased, cashed out, or exchanged for jewelry in the future."
Zhang Yunxuan, who works at a well-known financial institution in Beijing, told reporters that investing in products such as golden beans and golden melon seeds is similar to fixed investment financial management and forced savings. "Gold is at a high price, and it cannot earn interest. There are also hidden costs such as labor costs, handling fees, and losses behind the gold beans. It is difficult to make a profit by simply relying on 'buy low, sell high', and you may even lose money in the short term, so it is more suitable As a means of long-term investment or value preservation," Zhang Yunxuan said.
Industry insiders said that investors should also pay attention to risks when investing in golden beans and golden melon seeds. On the one hand, sales platforms vary in quality and quality, and related products may not be standardized enough in terms of quality and fineness. Merchants and products should be screened and confirmed. On the other hand, we should pay attention to the timing of purchase and liquidation, and fully consider the possible costs of testing, repurchase, etc., to avoid "drawing water from a bamboo basket" and losing more than the gain.
There are many factors supporting gold prices in the future
In 2023, international spot gold prices rose by more than 13%, the largest annual increase since 2020. How do you view the subsequent performance of the gold market?
It is understood that fluctuations in international gold prices are highly related to factors such as the Federal Reserve's monetary policy and geopolitical risks. The market's strong expectations for the U.S. dollar may lead to a correction in gold prices; when a hot crisis event occurs or the U.S. dollar weakens, gold prices may rise. In addition, continued gold purchases by global central banks are also one of the favorable factors supporting the performance of gold prices.
Many institutions believe that in 2024, multiple factors will support the high operation of international gold prices: the market expects that the central banks of major Western economies will enter an interest rate cut cycle in 2024, coupled with the election that many major economies around the world will hold, and the geopolitical tensions in hot spots. and other factors, gold as a traditional hedging tool is expected to continue to be sought after by global investors. UBS Group predicts gold prices will reach $2,150 an ounce by the end of this year. Wells Fargo expects gold prices to end the year near $2,200 an ounce.
It is understood that in the face of uncertainties, central banks around the world have increased their holdings of gold. Data released by the World Gold Council shows that in the first three quarters of 2023 alone, global central banks purchased a record 800 tons of gold, a year-on-year increase of 14%. The association's recent survey results also show that more than 70% of central banks surveyed expect global gold reserves to continue to increase in the next 12 months. Among them, the People's Bank of China increased its gold holdings by 224.88 tons in 2023, pushing China's gold reserves to reach 2,235.41 tons by the end of 2023. As of December 2023, the People's Bank of China has increased its gold holdings for 14 consecutive months.
Higher prices will also affect residents' gold consumption and investment decisions. The analysis of the "Global Gold Demand Trend Report" released by the World Gold Council believes that in 2024, the RMB gold price is more likely to remain at a historical high. If the domestic gold price rises further, investors may choose to wait and see, waiting for a better opportunity to enter the market.
In this case, blindly "chasing the price" is risky. Experts said that the current international gold price is at a high level and there are many uncertain factors affecting its future trend. Moderate allocation of gold assets can reduce the volatility of a family's overall investment portfolio and increase risk-adjusted returns, but investors need to consider personal risks. Affordability and ease of purchase rational investment.
It is easier for young people to get ahead when buying gold. In this regard, industry insiders remind young consumers to distinguish between investment gold and jewelry gold when investing in gold. Among them, investment gold such as gold coins and gold bars do not have too many craftsmanship attributes, and the price is closer to the real-time gold price, with lower additional costs. In addition to its investment and collection functions, jewelry gold is generally mainly used for wear and decoration, with higher craftsmanship value and lower additional costs. high.
How to effectively avoid gold investment risks? Dong Ximiao, chief researcher of Merchants United Finance, believes that residents buying gold should have basic investment and financial management knowledge, especially understanding of precious metal investment. At the same time, asset allocation should be done based on personal risk preferences, investment capabilities, investment experience and other factors. "When investing, you should buy products that you understand. Young people should avoid falling into the 'herd effect' and follow the trend. You should choose a method that suits you for investment and financial management." Dong Ximiao said.
Wang Wenzheng
(People's Daily Overseas Edition)