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MARY LOUISE KELLY, HOST:

Gold sparkled this spring. The price of the precious yellow metal jumped as much as 22% between mid-February and mid-May. One of the big drivers was demand from China, and NPR's John Ruwitch decided to find out why.

JOHN RUWITCH, BYLINE: The Caibai market in Beijing is like a huge department store just for jewelry. There are counters and counters of earrings, bracelets, necklaces, charms, statuettes, coins. You name it, they have it - including, on the top floor, rectangular gold bars of various sizes. That's where we met a man who had just plunked down some of his savings. He only told NPR his surname, Li, because he wasn't comfortable talking about his investments publicly.

LI: (Non-English language spoken).

RUWITCH: "The gold bars are beautiful," he says, "and they're practical."

LI: (Non-English language spoken).

RUWITCH: "Gold," Li says, "retains value." And he cites an old saying - in troubled times like war, buy gold. It's advice a lot of people in China have been taking lately. The reasons are straightforward, according to Joshua Rotbart, a Hong Kong-based precious metals trader.

JOSHUA ROTBART: They always say the price of gold is - actually shows you the fear factor of people.

RUWITCH: Fear, or at least concern, has been running high. China's economy is limping, its stock market underperforming, real estate is in a state of crisis, and the value of China's currency, the renminbi, has dropped 13% against the dollar in the last two years. In the first quarter of this year, Rotbart says, China's consumption of gold bars and coins rose 68% compared with the same quarter last year.

ROTBART: And it is performing very well, of course. I mean, gold outperformed all other assets in China.

RUWITCH: And it's not just Chinese retail investors who've taken a shine to gold.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON: (Non-English language spoken).

RUWITCH: China's central bank went on a buying spree, too, for 18 consecutive months through April. The World Gold Council says it added 316 tons, bringing its gold holdings to 2,264 tons, making it among the biggest gold stockpiles in any national vault. Xing Zhaopeng is a senior China strategist at ANZ Bank in Shanghai.

XING ZHAOPENG: (Non-English language spoken).

RUWITCH: He says the gold buying is a good investment and also a tactic in the central bank's broad efforts to de-dollarize its foreign exchange reserves - in other words, to shift away from dollar assets like Treasury bonds in the face of friction with the United States. In recent weeks, the buying has cooled, and the price of gold has come down. It's a little over $2,300 an ounce now, but Xing thinks it could reach $2,500 by the end of the year. Nikos Kavalis agrees. He's a Singapore-based precious metals consultant.

NIKOS KAVALIS: Wouldn't be surprised if who saw a new all-time high before the end of the year or early in 2025.

RUWITCH: Beyond China's domestic economic woes, geopolitical frictions from Ukraine to Gaza, to the tensions between Beijing and Washington all point to sustained demand for the safe haven investment of gold. So do expected U.S. interest rate cuts. For some, the allure of gold is hard to resist. Back at the Caibai market in Beijing, newlyweds Niu Tianwen and Jin Shan had bought one gold bracelet and were looking at another.

NIU TIANWEN: (Through interpreter) We wanted to buy diamond rings, but we figured that they can't hold value as well as gold. So we decided to cut a little of our budget for diamonds and buy some gold instead.

RUWITCH: They don't think of the jewelry as an investment. But Niu says, it's not as if there's any better place in China to park their money these days. John Ruwitch, NPR News, Beijing.

(SOUNDBITE OF TENDAI SONG, "TIME IN OUR LIVES") Transcript provided by NPR, Copyright NPR.

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