Gold Investment Multiple Choice Question: Who is the Better Solution

Recently, China Securities Journal reporters visited a jewelry store of a certain brand and learned that, driven by the dual expectations of price increases at the end of the month and promotional activities during the Spring Festival holiday, many popular products in the store had already been sold out, and restocking was difficult. Even after the promotions ended, customers continued to queue, with some saying, “Even though the promotion is over, I’m still worried about price hikes and want to buy some in advance.” This gold-buying frenzy is also reflected in the capital markets, with the “golden feast” simultaneously beginning. The China Gold Association stated that in 2025, the consumption of gold bars and coins in China will first surpass that of gold jewelry. Faced with physical gold, bank-issued savings gold, and fund products like gold ETFs and gold stock ETFs, investors are at a crossroads: how to allocate assets to better participate in this gold-buying wave?

The Pros and Cons of Physical Gold

For many gold buyers rushing to the counters, the sense of security from holding gold bars or jewelry is irreplaceable by other investment methods. The core advantage of physical gold lies in its “ultimate safe haven” property, not relying on any financial institution’s credit backing. It is recognized as a hard currency with strong asset preservation ability in extreme market environments. Data from the World Gold Council also confirms this strong demand: in 2025, China’s consumption of gold bars and coins will reach 504.238 tons, a year-on-year increase of 35.14%, surpassing gold jewelry for the first time and becoming the largest category of domestic gold consumption. Investors’ physical gold consumption has shifted from wearing and wedding-related scenarios to investment savings.

However, behind this sense of security are costs that cannot be ignored. There is a price difference between buying and selling physical gold, which is an implicit cost borne by investors upon entry. For example, investing in gold bars, which are priced closely to the Shanghai Gold Exchange spot gold price (Au99.99, reported at 1144.00 yuan/gram on February 26), involves additional costs in bank channels. As of 2:00 PM Beijing time on February 26, ICBC’s Ruyi Gold Bar was priced at 1161.36 yuan/gram, with the bank’s buyback price at 1139.50 yuan/gram, locking in a spread of over 20 yuan/gram.

Gold jewelry, with a stronger consumer attribute, is a “premium zone.” As of 2:00 PM Beijing time on February 26, Chow Tai Fook’s retail price was 1576 yuan/gram, Chow Sang Sang was 1620 yuan/gram, with higher premiums over the base gold price, including brand premiums, craftsmanship fees, and store operation costs. When investors want to cash out, these additional values may vanish, and the resale price depends only on gold purity and weight. Additionally, physical gold faces storage security issues, high costs for safe deposit box rentals, and supply shortages.

In contrast, bank account gold and savings gold products offer a middle ground. Account gold (paper gold) is quoted in USD in real-time. A staff member from Everbright Bank indicated that such products are suitable for investors with foreign exchange experience and demand for paper gold trading, allowing profit from price differences. Savings gold, through “fixed amount accumulation and cost averaging,” helps novice investors achieve long-term, stable layouts amid gold price fluctuations, reducing short-term volatility risks. For gold futures, China Merchants Securities notes that trading requires margin, involves leverage, and is more suitable for professional investors.

The Explosive Growth of Gold Funds

With the simultaneous launch of the “golden feast,” public mutual funds, thanks to their high liquidity and low threshold, have become popular among investors. Since 2026, the scale of gold-related funds has experienced explosive growth. Data shows that as of February 26, the market’s 14 gold ETFs and 6 gold stock ETFs have all significantly increased in size compared to the end of 2025. Among them, the Gold ETF (518880) grew from 93.985 billion yuan to 123.476 billion yuan; the Guotai Gold ETF (518800) increased from 29.483 billion yuan to 44.971 billion yuan; and the E Fund Gold ETF (159934) also surpassed 45 billion yuan. The influx of funds reflects investors’ recognition of gold’s value in asset allocation and their demand for convenient investment tools. As of February 26, the average year-to-date return of gold stock-related ETFs exceeded 28%, far surpassing the 17.60% average increase of gold ETFs during the same period. This indicates that during a rising gold price cycle, gold stocks may generate excess returns beyond the gold price itself.

However, high returns are inevitably accompanied by high volatility. Gold stocks are much more volatile than gold prices, and their prices are also affected by company operations and market sentiment. Hu’an Fund’s manager Xu Zhiyan suggests that ordinary investors should focus on gold ETFs for allocation, given their tax advantages and liquidity, and recommend maintaining a gold proportion of 5% to 15% in their portfolios. China Asset Management proposes a “dumbbell” strategy: leveraging the negative correlation between gold and technology growth assets to build a “gold + tech” portfolio, pursuing growth while using gold as a ballast to improve overall risk-return ratio, rather than relying solely on speculative gains from a single asset.

Preventing High-Level Volatility Risks

In the face of short-term buying surges and numerous investment options, professional institutions generally advise maintaining calm and adjusting asset allocations accordingly.

Xu Zhiyan explicitly recommends that ordinary investors avoid leveraged and margin products such as gold futures and options. These tools are mainly suitable for professional investors for hedging or trend speculation, and their high risk does not align with the goal of steady wealth growth for ordinary investors.

China Asset Management suggests “buying on dips and avoiding chasing highs,” believing that the current correction period may be a rational window for layout, and recommends dollar-cost averaging to participate gradually and smooth short-term fluctuations. Song Jiangzhen, director of the Market Research Center at Guangdong Southern Gold Market Research Institute, also reminds individual investors to be patient with gold investments and avoid chasing prices.

Regarding the future of gold prices, institutional views are generally optimistic but cautious about short-term fluctuations. Founder Securities believes that global de-dollarization, central bank gold purchases, and normalized geopolitical risks form a long-term positive strategic logic for gold, but short-term prices are at high levels, with increased trading attributes, and investors should beware of potential short-term pullbacks caused by changes in Federal Reserve policy expectations. China Asset Management also warns that during the global credit reshaping period, gold’s volatility has increased significantly, and investors should regard it as part of asset allocation rather than a speculative tool.