Gold: Investment Winning Over Adornment
Tuesday, 8/26/2025 17:01
Record gold prices are crushing jewellery demand...
BECAUSE GOLD in any form has always represented a store of value in all ages and all culture, it's hard to strip out the investment motive from Asia's giant gold jewellery demand, says Adrian Ash at BullionVault.
But while the
surge in gold prices caused by Donald Trump's return to the White House has crushed jewellery sales in China and India, it has coincided with a marked rise in the Asian giants' retail bullion bar and coin demand.
Like, a big rise.
Demand for retail investment products in the Big 2 has leapt so far in 2025.
On BullionVault's analysis of data from the mining inustry's World Gold Council, in fact, it accounted for very nearly half of total household gold purchases across China and India during the first half of the year.
If anything, that figure of 48.4% understates the true share of retail bar and coin in China and India's total household gold demand. That's because the figures for bullion product purchases are reported net of reselling, whereas the demand figures for jewellery are gross, and don't account for scrap recycling.
Looking globally, and accounting for scrap whilst also throwing in gold's industrial demand to get a net number for total fabricated product demand, retail bars and coin already ate 46.5% worldwide over the 10 years ending 2024.
Over the first 6 months of 2025, that rose to 72.0% on our analysis of
the WGC data.
Gold is unchanging and eternal, of course. But the data show that its use is increasingly shifting towards investment first, adornment second. This marks
gold's return as a core financial asset, far distant from the trinket-prices of 20 and 30 years ago.
Between them, China and India account for more than half of global gold demand each year. By weight, their jewellery purchases sank by a quarter (25.0%) between January and June compared with the first 6 months of 2024, setting the smallest half-year total on recent records outside of the Covid pandemics and lockdowns of H1 2020.
Yet in total, China and India's household gold demand fell only 8.5% year-over-year, despite gold's run of new all-time record prices. That's because bullion coin and bar purchases have surged, accounting for that series record 48.4% of total household demand among those 2.5 billion consumers.
Why such a strong move in favour of bullion?
First, it's a natural response to high prices, as it will reduce fabrication and transaction costs, making a purchase feel a little more affordable.
Second, and for households now viewing gold as an investment first, it will also offer a better rate of return when the buyer comes to take profit, because mark-downs on re-selling gold become smaller the closer you get to the ultra-efficient market in large, wholesale bullion bars.
Looking ahead, the collapse in India and most especially
China's fast-falling gold jewellery demand hasn't dented
the precious metal's underlying uptrend so far. Quite the reverse. But it's very bad news for their domestic jewellery manufacturers and retailers. It also echoes
the long-term decline in profit margins for bullion refiners worldwide as well. Because increasingly, buyers want to pay as little mark-up as possible to the spot price.
Which is what you do using BullionVault.
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