It's an adorable anecdote, but can it - and numerous stories like it - really account for China's renewed gold appetite? Is the gold frenzy really just a matter of bargain-hunting by aunties (and perhaps others)? In an effort to explain the country's peculiar passion for gold, the Beijing Daily newspaper published a feature comparing the Chinese hunger for gold with Warren Buffett's aversion to it and other investments that don't generate returns:
"Perhaps the majority of Americans cannot comprehend the unusual feelings Chinese people have toward gold and silver. They've never considered that rather than being afraid to invest in gold, the Chinese are more afraid that they won't possess gold. Maybe what Chinese aunties care about is not the price of gold tomorrow, their desire is perhaps nothing more than to buy gold, to delight in gold, to hold it. Chinese aunties' gold investment strategies are simple and unsophisticated, they just 'buy what they want.'"
Still, even though China's gold buyers have shown what might appear as a short-sighted passion for what some consider a low-return investment, they're not necessarily acting irrationally.
Some news outlets have taken pains to point out that a precious metal might not be such a bad savings plan if you live and invest in China.
Zhu Ning, a professor at the Shanghai Advanced Institute of Finance, offered a sympathetic and detailed defense of the aunties presented in a widely-cited blog post:
"Why are Chinese aunties so frenzied in their quest for gold? The primary reason is the limited options for domestic investments. The country strictly controls real-estate purchases; money could be saved in the bank but interest rates are low, and taking into account inflation, there are hardly any profits, but mostly losses; it's been only a few years since the stock market slump, with investors losing much of their wealth. So, after gold prices fell, many people thought of gold as a last straw investment and now eagerly anticipate a future rise in value. They only want an investment outlet."
Zhu's point likely stands, regardless of whether it was aunties or a more diversified group purchasing the large volumes of gold that have flowed out of Chinese jewelry stores over the past month.
But on China's microblogs, if not in its newspapers, there remains a stubborn Chinese confidence that the gold price is now in the hands of the aunties. "It's almost Mother's Day," tweeted a Wenzhou-based microblogger on Saturday. "My mother bluntly told me to buy her gold."
Adam Minter, the Shanghai correspondent for the World View blog, is writing "Junkyard Planet," a book on the global recycling industry. He writes the article for the Bloomberg View. The opinions expressed are his own.
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