A clerk sorts gold jewelry at a shop in Linan, Zhejiang province, June, 25. (Photo/China Daily)
China's young gold-backed ETFs shrug off short-term shocks, evolve into long-term bets
When 63-year-old retiree Zhu Wanhua heard about the opening of the Shanghai Book Fair in August, she went to the annual event despite the late summer heat, in search of books on how to trade in gold-backed exchange-traded funds.
"There is a saying that when markets fluctuate, you should buy gold. I know there is a lot of talk about dama (retired ladies) buying gold. I used to buy gold too, but storage and transactions posed trouble. So, when I met my friend who trades in gold-backed ETFs, I decided to learn about them," she said.
Sections of investors in China have been shifting their attention to gold-backed ETFs from physical gold of late. Like them, Zhu has been tracking the gold price online and subscribed to market newsletters. The rise in prices of gold as well as gold-backed ETFs in the first half of 2016 set her thinking.
The impact of the June 23 decision of the United Kingdom to exit the European Union on securities, currencies and commodities markets, including the gold market, is likely to be reflected in the July-September quarter.
In the seven days after the vote, searches for "gold" on Baidu surged 44 percent year-on-year.
A World Gold Council report said the gold price in U.S. dollar terms rose 25 percent year-on-year in the January-June period, the best first-half record since 1980.
"Gold demand in Q2 followed the trend from the prior quarter: huge ETF inflows counterbalanced by anaemic jewelry demand amid rising prices. Investment was the largest component of gold demand for two consecutive quarters, the first time this has ever happened," the WGC report said.
