American business magnate Warren Buffett has said he would not invest in gold even if its price dropped to $800 an ounce, because it has lost its monetary attribute and has thus become only a decorative metal. So it's surprising to see Chinese consumers rushing to buy gold, says an article in xinhuanet.com. Excerpts:

A member of staffs displays gold products at a gold store on April 25, 2013 in Ganyu county, Jiangsu province. [Si Wei/asianewsphoto]

Gold has been a precious metal since ancient times because of its exchange value. But because of the use of paper money, and especially after the breakdown of the Bretton Woods Institutions in 1973, gold has lost some of its monetary attribute.

Many international investors, therefore, have come to regard gold as a metal that has lost its investment value. Buffett has even compared gold with corporate stocks, saying: Buying Coca Cola (shares) can make money ... we should definitely choose a goose like stock which can bring us compound interests, instead of investing in a goose like gold, which only consumes our insurance and inventory.

The fact is that although Chinese people are now buying gold because it is cheaper, the metal remains the top choice to hedge the inflation risk. Besides, the lack of investment channels in the Chinese market has also been instrumental in creating the "gold rush" in the country.

Compared to the bearish stock market today, individual investors think gold would at least maintain its basic value instead of losing its shine altogether like many companies' shares. In addition, too many restrictions have been imposed on the real estate market for investors to venture into the sector, and financial products of banks are prone to fraud and financial risks. All this makes gold a safe choice.

According to rough estimates, the total value of the latest "gold rush" in China could reach 100 billion yuan ($16.21 billion), a fact that should not be ignored. We should not forget that despite their rising purchasing power, Chinese people still prefer to save rather than consume.

Therefore, it's time we provided more channels with better policies for them to exercise to their huge purchasing power. Otherwise, gold will continue to attract Chinese people for a long time to come.