It is evident the Chinese Yuan is not in a good place right now. Chinese investors are willing to exchange their Yuan for other assets, even if they have to pay a premium price to do so. Physical gold is of particular interest to them right now, despite the government looking to curb capital outflows. One could say Chinese investors find themselves in a gold-crazed scenario right now, and demand is surging at an accelerated pace.
Whenever economic turmoil occurs, the first thing investors flock to are other traditional assets. In most cases, stocks and bonds would be the primary choice, but things are different in China. With the bond market collapsing in recent times, other investments are gaining momentum.
One of those assets is gold, which has always been a precious commodity. Due to its “global” nature, and track record of maintaining its value over time, bullion is a great investment vehicle. Over the years, Chinese investors have pumped a lot of money into buying gold whenever they can. Particularly physical gold is of great interest as of late.
Physical Gold And Bitcoin Are Interesting Assets
Obtaining physical bullion is not cheap, though. Investors have to pay a rather steep premium price right now, although that it not deterring the enthusiasm by any means. Paying a higher premium to bypass capital controls is worth the trouble to certain people right now. Considering how the Yuan is on a path to further devaluation over time, that is not surprising by any means.
Unfortunately, the Chinese government is working on countermeasures. The current plan is to curb capital outflows, and they are paying close attention to the bullion market right now. It is evident the government wants to keep money within the country above anything else, even if that means taking drastic measures.
At the same time, another asset is knocking on the door. Chinese investors are paying close attention to the Bitcoin price, although it remains unclear if they are purchasing the cryptocurrency right now. Considering how the cryptocurrency is on target to reach a new high since 2014, rest assured investors all over the world are eyeing the charts right now. But there is a big difference between keeping tabs on bitcoin, and purchasing cryptocurrency.
All things considered, the financial situation in China is evolving in many different directions at once. Holding onto the Yuan may not be the best idea, but alternatives are hard to come by. For now, buying physical gold is a valid option, until the government curbs it. Bitcoin remains another asset worth exploring, although one never knows how the market will evolve.
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