Core Insights - The recent surge in domestic gold prices in China is attributed to a new tax policy affecting gold transactions, which has led to a significant price increase in the market [1][2] - The new policy, announced by the Ministry of Finance and the State Taxation Administration, reduces taxes on gold transactions conducted through the Shanghai Gold Exchange and the Shanghai Futures Exchange [1][2] - The change in tax policy has resulted in a shift from a 13% VAT deduction to a 6% deduction for ordinary invoices, increasing the tax burden on gold businesses and leading to higher consumer prices [2][3] Tax Policy Changes - The new tax policy exempts VAT on gold sold through designated exchanges, provided there is no physical delivery [1][2] - For physical delivery, the tax treatment varies based on the purpose of the gold, with investment gold benefiting from immediate tax refunds, while consumer gold transactions are subject to ordinary invoices [2] Market Reactions - Following the announcement of the new tax policy, gold prices in major markets, such as Shenzhen, saw a sharp increase, with prices rising from 930 CNY per gram to 991 CNY per gram [1] - Major jewelry brands have also adjusted their prices significantly, with increases ranging from 61 CNY to 63 CNY per gram for various gold products [2] Investment Recommendations - For investors looking to hedge against inflation or preserve wealth, it is advisable to utilize exchange channels like gold futures, which do not incur VAT if physical delivery is avoided [3] - Financial products such as gold ETFs are recommended for their low transaction costs and high liquidity, allowing investors to avoid the complications of physical gold ownership [3] Market Transparency and Regulation - The new regulations aim to clarify the distinction between the financial and commodity aspects of gold, enhancing market transparency and reducing tax arbitrage opportunities [3]

Core Viewpoint - The article discusses the recent "gold tax reform" in China, which aims to regulate the gold market by differentiating between the commodity and financial attributes of gold through tax leverage [2][56]. Group 1: Investment Trends - There has been a notable surge in gold investment among the Chinese public, particularly among older women and younger individuals, with many opting for physical gold bars and jewelry as a means of asset allocation [3][6]. - The rising gold prices have led to a more aggressive investment approach, with some young investors taking loans to purchase gold, viewing it as a significant opportunity for wealth accumulation [7][8]. Group 2: Tax Reform Details - The new tax policy, effective from November 1, 2025, introduces significant changes to how gold transactions are taxed, particularly focusing on the distinction between investment and non-investment uses of gold [16][19]. - Under the new regulations, transactions involving standard gold will be exempt from value-added tax (VAT) if no physical delivery occurs, while physical delivery will incur VAT based on the new classifications of gold usage [22][24]. Group 3: Market Reactions - Following the announcement of the tax reform, gold prices surged dramatically, with reports of prices increasing from 930 CNY per gram to over 1000 CNY within a short period [8][30]. - Various gold retailers and companies have adjusted their prices in response to the increased costs associated with the new tax structure, leading to a widespread increase in gold product prices across the market [29][32]. Group 4: Banking Sector Impact - Major banks, including Industrial and Commercial Bank of China, have suspended certain gold-related services, such as physical gold withdrawals, due to the implications of the new tax policy on their operations [34][40]. - The banks face challenges in determining how to manage the tax implications of gold withdrawals, leading to a temporary halt in services while they reassess their processes [44][46]. Group 5: Future Outlook - The new regulations are expected to discourage speculative behavior in the physical gold market while promoting investment in financial gold products, such as gold ETFs, which remain exempt from VAT [50][52]. - The overarching goal of the tax reform is to enhance the transparency and regulation of the gold market, aligning it with international standards and improving the competitiveness of the Chinese gold market [56][58].

Core Viewpoint - The article discusses the accelerated financialization of gold, highlighting its emerging role as a key asset in the global investment landscape amid a restructuring of the monetary order and increasing geopolitical risks [2][3][5]. Group 1: Financialization of Gold - The financialization of gold is driven by a shift in the global monetary order, with gold becoming a potential alternative to the dollar as a reserve asset [3][5]. - The World Gold Council reported a 1% year-on-year increase in global gold demand in Q1 2025, reaching 1,206 tons, the highest level for a first quarter since 2016 [3]. - China's gold reserves increased to 2,292.33 tons by the end of March 2025, with domestic gold ETF holdings rising by 327.73% year-on-year [3]. Group 2: Economic Logic Behind Rising Gold Prices - Gold prices surged to over $3,500 per ounce in April 2025, driven by a combination of geopolitical risks, U.S. debt concerns, and a significant increase in central bank gold purchases [5]. - Central banks have been purchasing over 1,000 tons of gold annually since the Russia-Ukraine conflict began in 2022, indicating a potential return of gold to a central role in the international monetary system [5]. Group 3: Three Pillars of Gold Financialization - The financialization of gold is supported by three main pillars: liquidity revolution, restructured pricing mechanisms, and functional transformation [8][10]. - The liquidity revolution involves the creation of financial products like gold ETFs and futures, which enhance trading speed and convenience [8]. - The pricing mechanism has shifted from physical supply-demand dynamics to algorithm-driven high-frequency trading, significantly impacting market liquidity [8]. Group 4: Structural Changes in the Gold Market - The Chinese gold market is experiencing a structural shift from physical dominance to financial dominance, with financial products outpacing physical gold transactions [10]. - The three-layer structure of gold includes physical, financial, and symbolic layers, with financial derivatives now dominating trading volumes [10]. Group 5: Gold as a Global Financial Asset - Gold's financialization allows it to transition from a static store of value to a dynamic asset in global financial infrastructure [11]. - As of April 2025, global gold ETF assets reached a record high of $345 billion, redefining gold as a new type of "borderless liquidity anchor" [11]. Group 6: Addressing the Triffin Dilemma - The financialization of gold may provide a solution to the Triffin dilemma by offering a non-sovereign international asset as a reserve alternative [12]. - The ongoing demand for gold from central banks is expected to persist, driven by geopolitical and currency risks, indicating a profound transformation in the global financial and trade systems [12][14].