China's National Financial Regulatory Administration has issued the “Notice on the Launch of a Pilot Program for Insurance Funds to Invest in Gold” (hereinafter referred to as the “Notice”), which allows ten insurance companies to invest in gold, effective immediately upon publication of the Notice on February 7.
The Notice specifies the requirements in the following three aspects. First, it defines the scope of business and form of investment in gold, and allows ten insurance companies to participate in the pilot program. Second, it standardizes the pre- and post-investment management of gold by pilot insurance companies. Third, it requires the establishment of a regular and interim reporting mechanism for the pilot program and stipulates the corresponding supervision and management requirements.
Gold generates long-term returns, with an average annual return of 8.6% in US dollars since the end of the Bretton Woods system in 1971. Meanwhile, since the creation of the Shanghai Gold Exchange in 2002, gold priced in Chinese yuan has recorded a higher annualized return of 9.8%. China, the world's second-largest insurance market, has a growing demand for diversification of its insurance funds into new asset classes. Gold's low correlation with other assets and its stable long-term returns make it a high-quality non-traditional asset for insurance portfolios. Adding gold to these portfolios offers the potential for lower volatility, higher returns, and an optimized risk-return profile, preserving or even enhancing asset value. Furthermore, amid growing global uncertainty, gold's established role as a hedge against risk positions it as an effective tool for insurance funds to manage global systemic risks.
David Tait, CEO of the World Gold Council, said: “We are pleased to see China actively exploring the possibility of involving insurance funds in gold investments, a move that will have significant implications for the future development of China's insurance and gold markets. Since 2013, China has established itself as the world's largest producer and consumer of gold. Allowing insurance funds to invest in gold will further promote the development of China's gold investment market, drive product innovation, optimize the investor structure in China's gold market, increase its international influence and competitiveness, and thereby revitalize the global gold market.”
The World Gold Council (WGC) has long been committed to promoting the sustainable development of the global gold market and improving participants' understanding of gold as a strategic asset. The WGC has supported and collaborated with the Insurance Asset Management Association of China (IAMAC), the Shanghai Gold Exchange (SGE), and the China Gold Association (CGA) to conduct ongoing research on the feasibility, channels, methodologies, and risk management measures for insurance funds investing in gold, providing international expertise and technical support. In December 2024, the IAMAC, in collaboration with the WGC, released the report “Insurance Investment Studies: Investing in Gold.”
The role of gold as a safe-haven asset has been accentuated by growing uncertainty in the global political landscape. As mentioned in our recent Gold Outlook 2025 report, “market consensus on key macroeconomic variables such as GDP, yields, and inflation suggests positive, albeit more moderate, growth for gold next year.” Similarly, according to our latest Gold Demand Trends Report: Full Year 2024, “In 2025, we expect central banks to maintain leadership... Geopolitical and macroeconomic uncertainty should be a predominant theme this year, driving demand for gold as a store of wealth and hedge against risk.”
Stephanie Cadman, World Gold Council