The National Financial Regulatory Administration of China has issued the "Notice on Launching a Pilot Program for Insurance Funds to Invest in Gold" (hereinafter, the "Notice"), allowing 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 respects. First, it defines the commercial scope and form of gold investment, and allows the participation of ten insurance companies in the pilot program. Second, it standardizes pre- and post-gold investment management by the pilot insurance companies. Third, it requires the establishment of a periodic and interim reporting mechanism for the pilot program and stipulates related monitoring and management requirements.
Gold generates long-term returns, with an average annualized return of 8.6% in US dollars since the end of the Bretton Woods system in 1971. Meanwhile, since the establishment of the Shanghai Gold Exchange in 2002, gold priced in Chinese yuan has posted 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 stable long-term returns make it a high-quality non-traditional asset for insurance portfolios. Incorporating gold into these portfolios offers the potential for lower volatility, higher returns and an optimized risk-return profile, preserving or even enhancing the value of the asset. Moreover, in the face of 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, executive director of the World Gold Council, says: "We are pleased to see China actively exploring the possibility of involving insurance funds in gold investments, a move that will have important 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 the Chinese gold market, enhance 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 feasibility, avenues, 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, launched the report "Insurance Investment Studies: Investing in Gold".
Gold's role as a safe haven asset has become more pronounced in the face of 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: Full Year 2024 Report, "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