Precious Metals Talking points 060826: StoneX weekly gold, silver round-up; gold MM shorts at lowest since 28th January
Politics, economic, geopolitics and investor sentiment
Rhona O'Connell
- Precious Metals
Precious Metals Talking points 110325: Impact of China gold tax changes, domestically and international
By: Rhona O'Connell, Head of Market Analysis
Rhona O'Connell, Head of Market Analysis, EMEA & Asia
Tel: +44 203 580 6115 / mobile +44 7384 833897
3 November 2025
Bars and coins may win here; four nines’ jewellery likely to be the loser
Source: Getty Images
As of last Saturday 1st November, the Chinese Government has stopped gold retailers that source their gold from the Shanghai Gold Exchange (SGE) from offsetting their 13% VAT charges, reducing the offset to just 6%. This may further re-shape the complexion of the Chinese jewellery market as it means that four nines’ purity may lose market share to lower caratage pieces (or bars/coins). This is because part of the beauty of no tax is that the shop price charged for jewellery closely reflects the value of the gold content (apart from fabrication and sunk cost charges) – so that any future resale also reflects the value of the gold (apart from re-melt costs). This has been a key attraction of high content pieces.
The addition of VAT dilutes the gold content versus the price paid. Therefore this erodes the concept of high purity jewellery as an investment because anyone wanting to sell a jewellery piece in future will automatically be 6.5% worse off on the basis of a flat gold price (fabrication and remelt charges will still apply, of course, meaning that there has always been some dilution, but this additional charge widens the gap). Personal taste aside, of course, this therefore reduces the attraction of high purity jewellery against lower caratage pieces as the VAT charge on purchase will not be rebated on resale!
This also means, of course, that gold that comes off the market in lower caratage jewellery is less likely to be mobilised down the line, thus keeping it off the market; and further enhances the attraction of coins and small bars for those wanting high gold content purchases.
It is possible, also, that this government action may be part of the effort to divert disposable income into flagging areas such as property. In absolute terms a contraction in the jewellery sector is unlikely to make a tangible difference to property fund flows, but every little helps.
I’d say it won’t make a huge amount of difference on a global scale – it may stretch margins for some jewellers, but as they would be likely to pass it through to the consumer. I would imagine, given that there’s been a swing away from jewellery to coins and bars over the past few months and jewellery has been under a cloud, that this will extend that period of underperformance before prospective purchasers adapt to the higher retail price level. It could also mean more direct purchases through Hong Kong.
For context; China’s gold jewellery demand in the first nine months of this year has averaged 93 tonnes quarterly, a 25% drop against the averages in Q1-Q3 2024 and a massive 42% fall from the equivalent period of 2023. Looked at on an annual basis China is typically responsible for between 27% and 31% of global gold jewellery consumption; in the first nine months of this year it has accounted for 25% of the total.
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