Wu Yingzi, one of the Chinese dama, bought 10 gold jewelries worth more than 100,000 yuan last year in Shanghai. "Since I couldn't afford houses and thought stock market was too risky, gold was a better option to invest in," said Wu.

According to statistics, dama like Wu were the prime force in the gold buying craze last year and the irrational investment didn't lead to profit.

A senior analyst in jewelry market told China Economic Weekly that the gold buying craze had a bad influence on the development of the whole industry. "Investors should buy paper gold or gold bars and coins that can be liquidated in short terms," said the analyst. "Buying gold jewelry as sheer investment in a way has degraded the design and vulgarized the cultural industry and led to an irrational raw material price war in the industry."

Zeng Yufen, one of the more rational dama, called it early before it got out of hands. After purchasing three gold panda coins, Zeng saw the risk in investing blindly. "Even though gold coins can be liquidated in second-hand market, it's impossible not to lose money if the market expectation is low. Judging from the gold price now, I don't think I will invest in gold any time soon but I will keep an eye on gold-related financing product," Zeng said.

Analyst Zhan Dapeng with Xinhu Futures told China Economic Weekly that the fundamental reason for the gold price slump is that the demand was overdrew last year and investors are now on the fence since the price is very unlikely to rebound this year.

"After rising for so many years, gold price now is much higher than its cost price and the bubble in gold market has been accumulating for too long," said Li.

Talking about the dilemma dama are facing, Zhan is not optimistic. "Gold price may rise in short term but it's still not a good choice for long-term investment. With the sluggish demand and money flowing into US stock market and treasury market, China's macro economy will not be backing the gold price rise."

Considering the limitation for gold price to fall any future, Li said that if the price keeps falling, investors can consider buying again. "If investors have floating capital, they can make an investment with same proportion near the cost price so that the holding cost will be reduced and they have a chance to break even," said Li.

"If investors don't have floating capital, they can pledge the gold that they are currently holding to the bank and buy more gold with the cost price. In that case, interest cost need to also be taken into consideration," Li said.

Zhan suggested the investors bypass gold products if they have other choices. "If investors have to invest in gold, I suggest that they can focus on products like gold ETF and paper gold because security deposit is not included in the cost while the cost of real gold includes process cost and consumption tax which drives up the price."

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