With China’s worst inflation in 15 years, volatile stock markets, and low interest rates, 18-year-old Chinese girl Tina Hong is betting her financial security on “gold beans”.
Weighing only 1 gram, gold beans and other gold jewelry are increasingly seen as the safest investment for young people in China in an unstable economy. It is part of a larger trend of consumer demand for everything gold – from gold bars to gold beans and bracelets.
Hong is currently a first-year computer science student at Fujian University. She started buying gold beans in January because the price was relatively low, around 600 yuan ($83) per gram. Hong said, “Basically, you can’t lose money when buying gold.” She said she has over 2 grams of gold beans and will continue to buy as long as the price is lower than the international gold price.
Considered an investment point for young consumers, gold beans stored in glass jars are the latest hot-selling item in Chinese jewelry stores.
According to the 2023 China Jewelry Consumer Trend Report by Chow Tai Fook Jewellery Group Ltd, Generation Z consumers – who are affected by high unemployment rates and the country’s inflation – are among the top gold accessory consumers in the world’s second-largest economy. The attractiveness of gold has emerged as people return to shopping amidst disappointing growth in recent months.
Gold fever in China
Lack of trust in traditional investments has fueled a new gold frenzy in China.
The national stock market has seen a decline since reopening after the pandemic, with one of the main indices falling to its last seen level in 2018. The country’s middle class is bearing the brunt of the real estate recession – while the central bank has cut the benchmark interest rate four times since December 2021, eating into the profits of asset management products.
Nikos Kavalis, CEO of London-based consultancy firm Metals Focus Ltd, says young people are bypassing “consumption to satisfy whims” and instead buying “asset-style jewelry” like gold beans that can be both decorative and an investment.
However, he warns that investing in gold beans – or other gold items – does not make sense as their prices are typically higher than spot commodity prices by 10% to 30%. He says investors are better served by putting money into gold ETF funds.
However, the enthusiasm for gold is still spreading on Chinese social media. On Weibo, the hashtag “Why do young people buy gold” has received 91 million visits. A lively discussion about the long-term value of gold is dominating social media, including a popular post saying “buying gold will stay away from trouble”.
According to the World Gold Council’s 2021 report, 3/4 of current gold consumers are estimated to be between the ages of 25 and 35, and many believe that investing in gold carries low risks. That confidence has been reinforced as gold prices have reached multiple all-time highs since December. Gold bars broke the $2,100/ounce threshold for the first time this month.
According to government data, sales of gold, silver, and jewelry reached a six-year high in December, up 29.4% from the same period last year. This precious metal now represents one of the fastest-growing consumer markets in China.
A spokeswoman for Chinese jeweler Luk Fook Holdings International Ltd said buying gold beans as gifts and investments also reached its peak during the Chinese New Year.
Even banks are joining the competition against traditional gold retailers to sell gold beans. For example, China Merchants Bank introduced a line of gold bean products in July 2023.
Cindy Yeung, Chairman and CEO of Emperor Watch & Jewellery, said, “Despite recent sharp rises in gold prices in China, consumers continue to show a strong preference for gold.”
Nevertheless, experts warn of hidden risks for consumers of gold beans and other gold items if they don’t understand the difference between real gold and counterfeit gold.
Lily Chen, a 26-year-old office worker in Shanghai, discovered that most of the gold beans she bought were mixed with iron, zinc, and copper when she tried to exchange them for a gold bracelet. “I never thought I would save money by buying gold at very low prices. I always make sure to buy gold from highly-rated online stores. But this can still happen,” Chen said.
