Chinese Consumers Rush To Buy Gold As Global Gold Prices Plunged Last Week

This week's crash in the global price of gold, the largest drop in 30 years, has resulted in Chinese gold retailers slashing prices and buyers flocking to take advantage of the new bargains by purchasing gold bars, gold jewelry and gold artworks.

Chinese consumers are reportedly buying gold as casually as they’d buy cabbages otherwise.

“So many people in line," a customer in Nanjing, a city in Jiangsu province, who was only identified by his last name, Li, said. “It feels a little like buying cabbages at an outdoor market, but this really is a great price.”

On Tuesday, when Baoqing jewelry, store located in Nanjing, posted its gold price of 328 yuan/gram (approximately $1,505/ounce), one of its regular customers, a gold investor, bought 10 gold bars each weighing 1 kilogram (2.2 pounds), costing a total of 2.9 million yuan, according to China Youth On Line.

On Wednesday, a woman and an older customer each purchased a 500-gram gold bar, totaling around 280,000 yuan. Their transaction amounted to 300 percent to 400 percent of their usual transaction since the price drop, according to the company’s manager. The company said its branches sold a total of 30 million yuan, five times the usual daily sales.

Gold retailers all over Guangzhou, a city in Guangdong province, are similarly reporting massive sales, according to yicai.com, to the point of gold being out of stock. The rush to buy gold bars has also spread to gold jewelry and artworks, too. The Chow Tai Fook (a Chinese jewelry chain) counter at a mall only had about 30 pendants left, a little more than 10 bracelets and one tray of earrings.

Hong Kong, too, is swept up in the gold rush. Many investors crossed to Hong Kong overnight to purchase gold in groups. Many Hong Kong gold shops are now out of stock, as well. On Tuesday, many Hong Kong gold e-tailers on taobao.com (China’s eBay) stopped selling gold jewelry.

Chinese have a long history of investing in gold. In recent years, gold has become an increasingly attractive investment in the midst of inflation fears and financial risks. According to the China Gold Association, China purchased 502.75 tons of gold (more than 1 million pounds) in 2012 alone, a 10.09 percent increase from 2011.