China has allowed 10 insurance companies to invest in gold for the first time – a significant step made possible by new regulations from the national financial supervisory authority. The precious metal is considered a safe haven with stable returns and could serve as a strategic addition to insurance portfolios.
Experts expect this initiative to not only strengthen Chinese insurers but also stimulate the global gold market. Learn more about the background and potential implications!
This article summarizes the key points from the World Gold Council (WGC) press release regarding the new directive from China’s National Financial Regulatory Administration allowing selected insurance companies to invest in gold.
The measure is seen as a significant step toward revitalizing both the Chinese and global gold markets. The press release highlights the reasons behind this decision, the potential implications, and the WGC’s role in promoting this development.
Background and key facts
- New guideline: On February 7, 2025, the Chinese National Financial Regulatory Administration issued the “Notice on Launching a Pilot Program for Insurance Funds to Invest in Gold” (hereinafter referred to as the “Notice”). This allows 10 selected insurance companies to invest in gold with immediate effect.
- Pilot program: The Notice defines the scope and form of gold investments for the 10 participating insurance companies.
- Regulatory requirements: The guideline standardizes the management of gold investments by the pilot companies both before and during the investment phase. It also establishes a mechanism for regular and extraordinary reporting and the associated supervisory and management requirements.
- Long-term returns on gold: The press release highlights the historical performance of gold as a long-term investment. Since the end of the Bretton Woods system in 1971, gold has achieved an average annual return of 8.6% in US Dollar. Since the establishment of the Shanghai Gold Exchange in 2002, gold has even achieved a higher annualized return of 9.8% in Chinese Yuan.
- Diversification for insurance funds: China, the world’s second-largest insurance market, has a growing need to diversify its insurance funds into new asset classes.
- Advantages of gold in a portfolio: Gold is highlighted as a high-quality, non-traditional asset for insurance portfolios. Its low correlation with other assets and stable long-term returns offer the potential for lower volatility, higher returns, and an optimized risk-return profile, which can help preserve or even increase asset value.
- Gold as a hedge against uncertainty: With global uncertainty on the rise, gold’s established role as a hedge against risk is being emphasized. This makes it an effective tool for insurance funds to manage global systemic risk.
Statement from the CEO of the World Gold Council, David Tait, who welcomes this move by China:
"We are pleased to see China actively exploring ways to involve insurance funds in gold investments, a move that will have significant implications for the future development of both China’s insurance and gold markets. Since 2013, China has established itself as both 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, enhance its international influence and competitiveness, and thus inject new vitality into the global gold market."
Role of the World Gold Council
The WGC has long been committed to the healthy development of the global gold market.
It has supported the Insurance Asset Management Association of China (IAMAC), the Shanghai Gold Exchange (SGE), and the China Gold Association (CGA) in researching the feasibility, methods, and risk management measures for gold investments by insurance funds, providing international expertise and technical support.
In December 2024, IAMAC, in partnership with the WGC, published the report “Insurance Investment Studies: Gold Investment.”
Outlook
The press release refers to earlier WGC publications that expect positive but more moderate growth for gold in the coming year (“Gold Outlook 2025”). Central banks are expected to continue to play an important role (“Gold Demand Trends: Full Year 2024”). Ongoing geopolitical and macroeconomic uncertainty is likely to support demand for gold as a store of value and hedge against risk.
Conclusion
The World Gold Council views China’s decision to allow selected insurance funds to invest in gold as a significant step toward strengthening both the domestic and global gold markets.
The measure aims to diversify insurance companies’ portfolios, improve returns, and reduce risk. Gold’s historical performance and its role as a safe haven in times of global uncertainty are cited as key reasons for this development.
The World Gold Council has played an active role in supporting this initiative and expects positive effects on the gold markets.
Sources
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About the Author
Holger Köppl
Managing Director of Elementum Deutschland GmbH
Managing Director of Elementum Gold GmbH
Holger Köppl began his long career in the financial sector with traditional training as a bank clerk at the Genossenschaftliche Zentralbank in Stuttgart. After several years as a corporate customer advisor and credit expert, he took over the credit department at Volksbank Bad Mergentheim eG, where he also played a key role in restructuring the bank during a difficult phase. From 2011, he held a management position at VR-Bank Asperg-Markgröningen eG before being appointed authorized signatory and head of the property developers and local authorities division at VR-Bank Ludwigsburg eG following the merger. His extensive professional training, including qualifications as a banking specialist and graduate in banking management, as well as his work as an auditor at the Chamber of Industry and Commerce, underscore his expertise in the banking industry. In addition to his professional career, Mr. Köppl has always been active with his own consulting firm in the field of corporate restructuring.
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