Gold and Shared Prosperity

The West and the East have very different histories and politics about gold ownership and preservation of prosperity, but liberalisations of gold markets in both, combined with digital innovations, are leading to a resurgence in private gold investment.

President Franklin Delano Roosevelt issued Executive Order 6102 in April 1933 compelling all US individuals, partnerships, and corporations to deliver gold coin, bullion and gold certificates to the Federal Reserve within just four weeks at $20.67 per ounce. Failure to comply was punishable by $10,000 fines and up to 10 years in prison. The following year FDR raised the official price of gold to $35 per ounce and nationalised the monetary gold reserves of the 12 Federal Reserve Banks.

With exceptions for jewellery, collectors’ coins and industrial use, private gold ownership remained illegal for Americans until 1974. UK too heavily restricted and discouraged private gold ownership from 1930s until Thatcher’s election as prime minister in 1979. Private monetary gold ownership remains marginal in the West, with most banks, insurance companies, and investment institutions owning none in their investment reserves.

In the West wages have been suppressed and largely stagnant in real terms since the 1990s. Wage suppression has many causes: manufacturing and services offshoring, immigration, corporate concentration, and the Chicago School management theory that returns to shareholders are the primary obligation of corporate managers. The US federal minimum wage is currently at its lowest inflation-adjusted value in 70 years.

Private gold ownership was heavily restricted in China from 1949. Gold produced in China was mostly used to buy foreign exchange for official reserves. The government’s encouragement of private gold ownership has happened in stages. The first stage was reopening of a jewellery market in 1982, but even jewellery gold remained tightly restricted. By 2002 gold consumption in China was just 0.16 grams per person, far below the 1.42 grams in the US.

China established a minimum wage system in 1993 as part of a broader poverty alleviation strategy. Government policy holds that wages should rise in line with the growth of the economy, more for the poorest workers. Wage growth has averaged 5% overall and 7% for the poorest workers for over three decades. This means wages double in real terms every 10-12 years on average.

Chinese have a very strong savings culture. China’s household savings rate surged from 35.6% in 2000 to a peak of 42.1% in 2010, driven by high rates of economic growth and government policies. In 2026 the household savings rate has moderated back to 35%.

Chinese home ownership is now about 94% (80% mortgage free) and the collapsed property bubble has discouraged further property speculation. Stocks have yielded low returns and are unfamiliar and untrusted to many Chinese. The vast bulk of Chinese household savings – an enormous 167 trillion yuan, 11.89 million yuan per person – are held low-yield bank deposits with limited diversification.

2002 saw the greatest liberalisation with the founding of the Shanghai Gold Exchange. In 2004 the government ended strict state controls and opened banking channels for gold bullion investment. In 2010 the innovation of Gold Accumulation Products (GAPs) at banks for individual and corporate regular, incremental, micro purchases of bullion gold, usually monthly from salary auto-debits. GAP balances in gold bought with funds from regular deposit accounts can be redeemed for physical gold on request against bank inventory.

Monetary gold (bars and coins) has overtaken jewellery demand and is now 2.5 times larger for Chinese gold consumption. Gold is increasingly common as an investment and store of value, with fastest rates of accumulation among women 18-34 for jewellery and women 30-50 for bars and coin. GAPs are the preferred gold savings method for the young, recent graduates and early career workers in their 20s and 30s. Many buy one gram of gold with every salary payment.

A nation of 1.4 billion whose incomes double every 10-12 years, who save ±35% of household income, is increasingly saving in gold, both as jewellery and as bullion gold.

Read that sentence again because the maths of that sentence mean Chinese households are now driving global gold demand in parallel with rising incomes, supplementing rising central bank purchases of gold.

Central banks remain the dominant buyers, about 21% of the global market for gold. Central banks bought 1000 tonnes of gold in 2025, about double the rate of the previous decade, driven by USD diversification and repatriations. But household ownership is growing from fringe buyers of investment gold with a demographic shift to younger, digitally native savers, increasingly women.

China is now building out a global gold infrastructure to support wider adoption of Gold Accumulation Products. Shanghai Gold Exchange opened its first external vault in Hong Kong in 2025 for up to 2000 metric tonnes. Singapore, Kuala Lumpur, Dubai, Riyadh, and Moscow are being considered to future external vaults. South Korea launched its first retail gold accumulation service in 2026. Tokenised gold products (PAXG and XAUT) make it easy for anyone with a smartphone to invest small mounts in gold.

What began to encourage small, regular savings in gold is now becoming a broader infrastructure strategy and a global model for gold optionality for inflation hedging and wealth preservation.