Spring Festival sparks a 'gold rush' in China

Customers swarm to buy gold products at Caishikou Department Store in Beijing, capital of China, Jan 25, 2012.[Photo/CFP]

BEIJING - A "gold rush" swept through China during the week-long Lunar New Year holiday this year, with demand for precious metals and jewelry surging since the Year of the Dragon began.

Sales of gold, silver and jewelry rose 57.6 percent during the week-long holiday at Caibai, one of Beijing's best-known gold retailers, according to data released by the Ministry of Commerce (MOC) on Saturday.

Other jewelry stores across the country also saw sales boom during the period, with customers favoring New Year-themed gold bars, gold ingots and other types of Dragon-themed jewelries.

"Long treasured by Chinese, gold is no longer owned only by a privileged few, but has become a new investment channel open to all," said Guan Qiang, assistant manager at Caibai.

The Spring Festival gives people a chance to preserve and present gold as gifts, offering hopes that it will increase in value and not be impacted by inflation, Guan said.

During the week-long holiday, which lasted from January 22 to 28, the sales volume in Caibai and Guohua, another of Beijing's top gold retailers, reached about 600 million yuan ($95.28 million).

The figure showed a 49.7-percent increase over that of last year's Spring Festival, said a report released by the Beijing Municipal Commission of Commerce.

Caibai began selling gold bars as investment items during the 2008 Beijing Olympic Games, but the trend of buying gold or silver bars during the Spring Festival has really taken off in the past two years, Guan said.

For Guan and his colleagues, the Spring Festival rush was an exciting but exhausting experience, as customers flooded the store and surprised clerks with their purchasing enthusiasm.

"With customers crowding and rushing in, we did not even have time to eat and drink," said a sales clerk at the gold bar counter surnamed Li.

She said each shop assistant had received hundreds of customers per day and wrote several times more orders than on ordinary days.

"You can hardly even see the gold bars, necklaces and pendants in the display case. People seem crazy about gold, snatching it up more like a 'cheap cabbage' than such a precious metal," said Beijing resident Miao Miao.

"You have to quickly decide whether to make a purchase, or it will be taken away by others."

Miao was shopping for a pair of gold bracelets to give to her granddaughter as a gift for the New Year.

"When my daughter was born in 1984, we had no means or savings to buy her one as a keepsake. We can finally realize this dream by sending it to her daughter," Miao said.

However, Chinese do not value gold only in only sentimental terms. The precious metal is also expected to maintain or increase its value, as evidenced by the surging investment demand seen around the country, insiders have said.

"To most Chinese, gold is more convenient to cash in than other investment instruments. Despite common investment risks, the price of gold is clear and easy to judge," said Guan.

Compared to unpredictable investments, such as those in the stock market or housing sector, gold is cherished more by Chinese for its increasing value as an asset as well as the unlikelihood that it will be affected by inflation, Guan said.

China is expected to overtake India as the world's top gold consumer in the next few years. Strong demand for investments in gold and jewelry will have driven China's total gold demand to 750 metric tons in 2011, according to the World Gold Council.

Despite the record-high price of gold, the demand for investments in gold and jewelry has continued to soar, with the market expected to reach about 955.2 metric tons by 2020, thanks to a growing middle class and a more affluent society, said Binghai, director of the Shanghai Gold & Jewelry Trade Association.