The price of gold has risen, why is the older gold jewelry still falling in price?

Text: Jia Liu, Rise of BeatZ

"Gold has basically hit rock bottom," this has been the recent consensus among financial institutions.

After experiencing a peak in the first quarter and a decline in the second quarter, the COMEX gold front-month contract rebounded from $4,022.9 per ounce on June 30 to $4,380.4 per ounce on August 14, rising 8.9% for the quarter and 8.2% since August. Wall Street's strategy reports, investment research meetings, and gold bulls on social media all see the "end of the pullback" as the new consensus.

The problem is that the gold shops in the market do not seem to agree with this consensus.

With the Qixi Festival approaching, high-end malls in Beijing such as SKP, Shanghai Golden Eagle, and Guangzhou Taikoo Hui have started to offer massive discounts on "old-brand gold," which used to require a three-hour wait in line. Various full reduction discounts are now available, and with scalpers stacking additional discounts, prices can be pushed down to 21-18% off the marked price.

What's going on with the old-brand gold?

With Significant Price Reductions, What's Happening to Old-Brand Gold?

This wave of large-scale discounts has left previous high-price customers who queued to make purchases very unhappy. At the same time, the gold recycling business of old-brand stores has also put another group of consumers in an awkward position.

A consumer took a gold necklace from an old-brand store to inquire about the buyback price. She bought it at a lower gold price than the current price, and gold has experienced another round of soaring prices in the past year. Intuitively, she thought that selling it would at least not result in a loss. However, when she took the necklace back to the old-brand store, the final price quoted by the staff was almost the same as the total price she paid when she bought it.

This reveals the core commercial contradiction of old-brand stores: the counters sell "gold craftsmanship plus branding," but the buyback businesses often only deal with "gold."

Gold itself actually has a standard price difference. Rise of BeatZ saw a physical gold price table from a bank showing that the accumulation price of the four major banks' products is about 972.80 to 974.33 CNY per gram, and the redemption price is about 952.32 to 956.73 CNY per gram, with a bid-ask spread of only 16 to 21 CNY per gram. This spread mainly comes from casting, storage, and distribution costs, and is very transparent.

However, gold jewelry is different. In the price of a gold necklace, besides the daily gold price, there are also labor costs, design, store rent, sales service, brand marketing, and taxes.

Old Shop's Premium

The premium at Old Shop is even higher.

Unlike its peers, Old Shop's gold jewelry is not sold by weight but rather in a "fixed price" manner per piece. With its ancient craftsmanship, traditional Chinese aesthetics, display in top-tier malls, and the identity as the "Hermès of the gold industry," Old Shop's products generally carry a premium of around three times the price of gold material. What consumers purchase at Old Shop is not just a piece of luxury jewelry but a top-tier luxury item, rather than a gold asset.

However, once a consumer returns to Old Shop with the jewelry looking to liquidate, the buyer will no longer consider it a luxury item but pure gold: they must assess its purity, examine the soldering materials and components, bear the costs of testing and melting loss, and also hedge against the risk of gold price fluctuations.

BeatZ has learned that the industry standard quote for gold jewelry recycling is generally "spot price minus $100 per gram." In other words, regardless of how much premium was paid for craftsmanship and branding at the time of purchase, the recycling process is based on the same gold formula. Even if a threefold premium was paid at the time of purchase, the jewelry is only valued based on the gold itself during recycling. The difference between these two prices is the kind of indescribable frustration felt by a consumer when they receive a "fairly similar price."

The performance of Old Shop's gold stock this year has not only shown a disparity in discounts and recycling.

First, let's look at the trend of gold prices: On December 31, 2025, the COMEX gold front-month contract closed at $4,325.6 per ounce; by January 29, 2026, it had surged to a high of $5,318.4, then retraced, returning to $4,647.6 by March 31 and dropping further to $4,022.9 by June 30. At the end of July, it rose again to $4,049.1 and climbed to $4,380.4 on August 14.

Now, looking at Old Shop's gold stock: At the end of 2025, the stock price was HK$618. On January 26, it reached a high of HK$849.5, almost hitting a peak around the same time as gold, then fell together. Calculated using the 58 common trading days between the beginning of 2026 and the end of March, the daily return correlation coefficient between Old Shop's stock price and COMEX gold is approximately 0.39, indicating a moderate positive correlation. During this period, Old Shop was still living in the narrative of "rising gold prices, consumer buying frenzy, and brand valuation increase."

However, from the second quarter onwards, it is evident that this positive correlation is weakening.

As of August 14, gold is up 8.9% for the quarter, rose 8.2% in August, but Lao Feng Xiang Gold (Lao Feng Xiang Jewelry) fell by 3.7%, only up 2.7% in August and dropped 5.2% in the past week. From the beginning of the year to August 14, Lao Feng Xiang has cumulatively dropped by 46.0%, a much larger decline than other gold stocks.

The overall pullback of gold has ended, so why hasn't the stock price pressure on Lao Feng Xiang Gold ended?

The answer actually lies in Lao Feng Xiang's positioning, which is not just gold jewelry but luxury goods.

Looking at this global luxury goods company market value table, by the end of 2024, Lao Feng Xiang Gold was still only ranked 22nd, moving up 8 places in a year. It is preceded by LVMH, Hermès, and Richemont, the global luxury giants, with Chow Tai Fook, Prada, and Swatch among other brands nearby.

The capital market does not price Lao Feng Xiang as an ordinary gold shop but as a rising Chinese luxury brand. Lao Feng Xiang hopes that one day, like Hermès and Cartier, consumers walking into their stores will no longer ask about the price of gold and weight.

The dilemma faced by Lao Feng Xiang stems from its luxury positioning

Unlike the well-known Zhou Shì (Chow Tai Fook, Chow Sang Sang, Chow Tai Seng, Chow Tai Fook, and Chow Pak Fook) gold brands, "Lao Feng Xiang Gold" was not established long ago, but has developed rapidly. Its predecessor was even a company that made tourist cultural and creative souvenirs.

Founder Xu Gaoming had many years of experience in the tourism and cultural and creative industries and had interacted with many antique enthusiasts and high-net-worth clients. This experience allowed him to develop a deep understanding of the aesthetic preferences and consumer psychology of this group, making it difficult for outsiders to replicate what kind of symbolism can move them and what kind of scarcity mentality can make them willingly queue up.

Today, almost all of Lao Feng Xiang's product design and brand positioning can find traces back to this starting point.

Lao Feng Xiang Gold became independent at the end of 2016. After independence, Xu Gaoming officially proposed to build the "Oriental Hermès." The cultural narrative ability he learned from the tourism souvenir business was systematically transferred to gold jewelry from that moment onwards.

Traces of Buddhist elements have always been present in the product line. The best-selling items in the old shop now, such as the Pixiu, Vajra, Vajra Ghanta Box, Diti, and Gourd Pendant, almost all carry strong religious symbolism, which is in the same vein as when the Golden Treasure used to sell hand stringed religious items. In the words of a loyal customer, if your bag doesn't have a complete set of Pixiu, gourd, and Diti, you wouldn't even dare to say that you are a regular customer of the old shop.

Different from the traditional gold shop sales approach, the old shop has always emphasized its promotion of "ancient method gold," focusing on techniques such as filigree, engraving, blue firing, hollowing out, hammering, and inlaying; emphasizing the imagination of the Qing court's preparation office, the inheritance of Beijing filigree inlaying; and setting diamonds in solid gold rather than treating gold as a raw material waiting to be weighed.

In terms of location selection, the old shop also follows a luxury logic, only entering top-tier malls with extremely high entry thresholds such as SKP, The MixC, China World Mall, and Raffles City, and specifically choosing locations next to or opposite luxury brands like Hermès, Louis Vuitton, and Cartier. The old shop's 2025 financial report cited third-party data indicating that their consumer overlap with the top five international luxury brands like Louis Vuitton, Hermès, and Cartier has reached 82.4%, up from 77.3% in 2024. According to market data, the investment in the decoration and inventory of a standard old shop store is approximately ¥50 million.

What impresses consumers the most is the feeling that the old shop provides. Every day at noon, box lunches are provided to customers waiting in line, with two meat dishes, two vegetable dishes, and balanced nutrition. During afternoon tea time, male models are specifically hired to distribute Godiva chocolates, the water provided is Evian priced at over a dozen yuan per bottle, the orange juice is NFC, and even the bread for snacking is bought from a handcrafted boutique bakery.

To maintain its luxury positioning, during the gold price bull market from 2024 to February 2026, the old shop has raised its terminal prices multiple times, with some products experiencing significant cumulative price increases. Market sources indicate that the number of price hikes has reached six times, with some products seeing price increases of over 110%.

This strategy has indeed been effective. The old shop has redefined gold from a "material sold by the gram" to a "cultural asset sold by the piece," with products generally priced more than 55% higher than those of its peers, and at one point reaching the top in terms of store performance in the industry.

However, everything has its duality. The other side of the luxury positioning is the need to hoard a large amount of high-priced gold raw materials to support the sense of scarcity with a "spot price, no reservations accepted" policy. Once the gold price reverses, the risk is entirely borne by the inventory.

This is precisely why the Old Shop's gold recycling price is relatively low, and it is the core reason why the Old Shop's stock price has plummeted more than its peers in the past two years.

As of the end of 2025, the company's inventory balance was approximately 16.044 billion yuan, nearly tripled from the previous year-end, with a net cash outflow from operating activities of about 6.85 billion yuan, severely deviating from the 4.87 billion yuan net profit. To maintain the narrative of "profit from price increases," the company raised its retail prices six times during the gold price bull market, with a cumulative increase of over 110%, pushing up inventory costs.

By the time the gold price plummeted from its peak of $5598 in January of this year, this high-priced inventory became a looming impairment risk. The market was no longer willing to pay a 50 times price-to-earnings premium for it. Now, the Old Shop's rolling price-to-earnings ratio has fallen to around 12 times, making it almost indistinguishable from traditional gold shops like Zhou Dasheng and Lao Fengxiang.

It can only be said that success turns to failure.

From Queuing to Discounting: The Sweet and Bitter of Luxury Goods

Interestingly, the Old Shop had previously expressed a grand wish: to break free from the fate of traditional gold brands following the ups and downs of the gold price.

If only the stock price of 2026 is considered, it has indeed achieved this. The only thing is, the method is somewhat undignified, as the Old Shop follows the downtrend but not the uptrend.

Year-to-date, the COMEX gold main contract rose by 1.3%, up 8.9% for the quarter; the Old Shop's gold fell by 46.0% year-to-date, down 3.7% for the quarter. While gold rebounded from its low point in the second quarter, the Old Shop did not recover along with it. Instead, the market continued to discount its high growth expectations, high premiums, and high inventory risks.

This is not meant to denigrate the Old Shop.

After all, the Old Shop is a very special company in the gold industry. It is trying to prove that Chinese consumers will not only pay for weight but also for local craftsmanship, aesthetics, and identity expression. It has brought gold into the mall floors dominated by international luxury goods in the past, forcing the entire industry to rethink: can gold jewelry no longer be just a raw material business?

Moreover, the Old Shop has even attracted the attention of traditional luxury industry giants.

LVMH's Bernard Arnault was once spotted entering the Old Shop's gold store at the Shanghai International Finance Center, staying for about half an hour. According to witnesses, he carefully observed gourds, pendants, crosses, and displayed gold items, remarking, "Very exquisite, very interesting." And this was not his first attention: even before his visit, LVMH executives had visited the Old Shop's gold store twice. Group executives also noted that they had observed the growing interest of Chinese consumers in local brands, as some Chinese domestic jewelry companies have seen explosive demand.

In addition to Arnault, another recently appointed luxury group executive also visited: Roman Ross, who had just moved from LV to Fendi as CEO in July, took the opportunity during his visit to Beijing to inspect the brand's store operations and specifically visited Laopu Gold, personally experiencing the in-store service.

Analysts and competitors have also shown some activity. In a research report on Lao Feng Xiang, Morgan Stanley pointed out that Laopu Gold's competitive threat to Cartier is growing. Lao Feng Xiang's CEO, Nicolas Bos, also acknowledged the market value of Laopu Gold during an earnings call, stating that it has fueled the desire and vitality of the jewelry market.

If Laopu can address the current challenges it is facing, then the future of the gold jewelry industry will most likely evolve in two directions.

On one hand, there are gold bars, gold coins, and allocated gold. They are not flashy, lack a sense of identity, but their weight, price difference, and exit strategy are clear. For those who simply want to preserve value, this is the most straightforward choice.

On the other hand, there is high-end jewelry like Laopu. It must convince consumers that what they are selling is not just craftsmanship cost but also design, artistry, culture, service, and exclusivity. It doesn't need to be more cost-effective than gold bars, but it must showcase the consumer's unique identity.

This implies that, in the future, the most challenging situation will be faced by those jewelry stores that are neither compelling enough to make people forget about the weight nor suitable for investment due to their high prices.