Most of you know by now that I’ve long emphasized the two powerful forces driving gold demand: the Fear Trade and the Love Trade.
The Fear Trade is what most Western investors are familiar with. It’s the flight to safety during times of uncertainty, driven by concerns over inflation, interest rates, geopolitical risk and more. Gold has historically been sought as a safe haven during crises and recessions.
The Love Trade, on the other hand, is based on cultural affinity, religious tradition and rising household incomes, particularly in India and China, the two biggest consumers of the precious metal. Accounting for roughly 60% of global gold demand, the Love Trade is about buying physical gold as a symbol of status and celebration.
This brings me to Laopu Gold, a Hong Kong-listed company we recently took a position in, as we believe it sits at the very heart of China’s Love Trade.
A Cultural Phenomenon with Explosive Growth
Founded in 2009, Laopu Gold is a homegrown luxury brand with a deep focus on traditional Chinese goldsmithing. Its name, Laopu, literally means “Old Shop,” a nod to the company’s emphasis on cultural pride and nostalgia.
Laopu’s business model involves selling high-purity 24-karat gold pieces using a fixed-price, high-margin model. More than just a jewelry retailer, Laopu is selling exclusivity and exquisite design, which may be why some people think of the company as the “Hermès of gold.”
The stunning results speak for themselves.
Its stock has soared more than 2,300% over the 12-month period through June 4, 2025. Year-to-date, it’s up 315%—all while much of the Chinese economy has seen lukewarm recovery at best.
In an investment note dated May 28, JPMorgan projects Laopu’s annual revenue will reach nearly $20 billion this year, representing a 135% increase over 2024. Net income is forecast to reach $3.8 billion, up from last year’s $1.5 billion. Perhaps even more impressively, the company reported a gross margin of over 41%, nearly double that of Chow Tai Fook, China’s largest traditional jeweler. Laopu’s average store revenue exceeded 100 million yuan, the highest in the country for gold retail.
Gold as Culture, Not Just Capital
It wasn’t just Laopu’s stock performance that drew us to the company; it was also the story. As I’ve shared with you many times before, gold plays an important, auspicious role in Chinese culture. The yellow metal is given at births, worn at weddings and handed down as heirlooms. Young Chinese consumers aged 18–34 now account for over a third of gold jewelry sales, according to Bloomberg’s Chongjing Li.
Laopu has tapped directly into this demand. Their boutiques—36 of them so far, with at least eight more planned this year—are strategically located in some of China’s most prestigious malls and shopping districts, with lines sometimes stretching around the block. Their designs often go viral on Chinese social media.
A GDP-Backed Growth Story
Since the start of this century, China’s GDP per capita has increased over 13-fold, from under $1,000 in 2000 to approximately $12,600 in 2023. (For comparison’s sake, India’s GDP per capita has grown sixfold over the same period, or less than half as fast.) While there are signs of a slowdown, especially due to the real estate and demographic headwinds, we believe China’s long-term picture still supports growing discretionary spending in Tier 1 and Tier 2 cities. That’s where Laopu operates, and that’s where the luxury gold market is most resilient.
We believe Laopu is well-positioned to benefit from a shift in Chinese consumer behavior toward premium domestic brands. Much like how Moutai dominates high-end liquor or how BYD is overtaking Western electric vehicles (EVs) in China, Laopu is making the case that a Chinese company can lead in luxury jewelry.
They’ve also begun international expansion, with stores opened in Singapore’s Marina Bay Sands and Hong Kong’s IFC Mall.
The Biggest Risk May Be Sitting on the Sidelines
No stock goes up forever, of course, and Laopu’s meteoric rise has raised a few eyebrows. The company trades at earnings multiples some would call elevated (trailing 12-month price-to-earnings of 87x), and skeptics have compared Laopu to a “story stock” riding retail hype.
We’re watching the fundamentals closely. But as investors who’ve followed the gold market for decades, we’ve seen that price often follows passion—especially in culturally driven demand markets.
Laopu isn’t a typical miner or ETF proxy for gold prices. We believe it’s a pure play on China’s cultural and increasingly affluent relationship with gold. And at a time when Western luxury brands are losing ground in China, Laopu’s ascent feels like a secular trend, not a speculative flash. It’s riding the Love Trade, and it’s doing so in the most important gold market on Earth.
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