With nearly 200 billion yuan in available funds, why are insurance funds "restrained" from entering the gold market?

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Gold prices repeatedly hit new highs, sparking widespread industry discussion about their future trend and investment value. Currently, nearly a year has passed since the State Financial Supervision and Administration launched the pilot program for insurance funds to invest in gold, making the movement of insurance funds into gold naturally a market focus.

So, have insurance funds already entered the market in large numbers? Recently, exclusive information from related insurance companies revealed that several insurers have begun testing gold investments, but overall, large-scale allocations have not yet occurred. Many interviewees stated that the short-term caution among insurers is due to the initial cautious exploration required during the pilot phase, the time needed for team building, and the fact that gold prices have been rising steadily over the past year. In the long term, gold has distinctive safe-haven characteristics and is an interest-free asset. For insurers with long-term funds, opportunistic allocation and long-term holding are good options for diversification of their asset portfolios.

Insurance Companies Say They Will Gradually Increase Allocations

On February 7, 2025, the National Financial Supervision and Administration issued the “Notice on Conducting a Pilot Program for Insurance Funds Investing in Gold” (hereinafter referred to as the “Notice”), officially allowing insurance funds to participate in gold investment on a pilot basis, with the first batch of participants including 10 insurance companies.

Following the implementation of the pilot, these insurers have gradually begun to deploy. In March 2025, PICC Property & Casualty, China Life, Ping An Life, and Taikang Life announced they became members of the Shanghai Gold Exchange and completed their first gold transactions. According to the Shanghai Gold Exchange’s official website, as of the time of reporting, six insurers had become exchange members, including the four initially announced, as well as Taikang Life and Taiping Life.

According to the trading rules of the Shanghai Gold Exchange, members participate directly in transactions using their seats; non-member clients must first open accounts and obtain client numbers through authorized member institutions, which then act as agents to participate in trading via their seats.

The channel for insurers to enter gold investment has now opened, and actual investment steps are quite cautious. Recently, when interviewing some insurers with pilot qualifications, exclusive information revealed that the overall proportion of insurers involved in gold investment remains low. The main reasons include the early stage of the pilot, the rapid rise of gold prices in 2025, and the ongoing development of professional gold investment teams.

The “Notice” stipulates that pilot insurers must strictly adhere to investment ratio requirements, with the total book balance of gold investments not exceeding 1% of the company’s total assets at the end of the previous quarter. Based on this, the theoretical maximum allocation of gold assets among the 10 pilot insurers is nearly 200 billion yuan.

However, regarding actual current allocations, none of the insurers have provided specific data. One insurance business leader disclosed that their company’s gold investment ratio is very low, partly because gold prices have surged and hit new highs in 2025, and partly because their professional gold investment team is still being built. Although they have attempted some allocations, they remain cautious overall. The leader noted that long-term, gold prices are quite volatile, and insurers need to consider their own liability characteristics carefully. They will continue to monitor gold price trends and seize opportunities for allocation.

Lu Xiaoyue, one of the founders of Yan Shu Asset Management, told Securities Daily that the participation of insurance funds in gold investment is still in its early stages, with limited coverage, and last year’s significant gold price increase means insurers are still exploring gold investment.

朱俊生, a postdoctoral fellow and professor of applied economics at Peking University, told Securities Daily that during this pilot phase, regulators strictly limit the proportion of insurance funds involved in gold investment. Insurers mainly adopt defensive allocations to gradually accumulate experience. It’s also important to note that gold prices are currently at a historical high, with short-term valuation digestion and phase correction pressures, which somewhat reduce the short-term cost-effectiveness of investing in gold.

Long-Term Strategic Value of Gold Allocation

The cautious short-term approach to gold investment by insurers does not negate gold’s value. This prudence actually reflects the long-term, steady investment nature of insurance funds.

Interviewees believe that short-term caution does not change the long-term allocation logic. From a medium- to long-term portfolio perspective, the value of gold is rising. In the future, gold will have strategic allocation value for insurance funds, but its appeal will not be reflected in short-term nominal returns, rather in optimizing asset portfolio structure.

According to the “Notice,” the scope of pilot investments in gold includes: gold spot contracts listed or traded on the Shanghai Gold Exchange’s main board, deferred delivery contracts, Shanghai Gold centralized pricing contracts, inquiry-based spot contracts, inquiry-based swap contracts, and gold leasing business. This means pilot insurers can participate in gold market investments through standardized, diversified tools, further enhancing asset allocation diversification.

朱俊生 explained that, on one hand, gold has low long-term correlation with stocks and bonds, so allocating a certain proportion of gold can reduce overall portfolio volatility—especially important for risk-constrained insurance funds. On the other hand, gold’s hedging ability in extreme scenarios surpasses traditional financial assets. Additionally, market expectations that the Federal Reserve will continue to cut interest rates could lower the opportunity cost of holding gold, supporting its medium- to long-term price.

In the long run, research institutions and insurers agree that gold can optimize asset-liability management. Guolian Minsheng Securities analyzed in a report that, as a medium- to long-term holding asset, gold can help insurers improve the matching of assets and liabilities, especially suitable for long-term liabilities like life and annuity insurance, serving as a stable option to balance long-term liability pressures.

A senior executive from Ping An Life told reporters that since the gold investment pilot was opened, the company has attached great importance to the role of gold assets in portfolio allocation and actively promoted related work. From the market environment, gold currently has good investment value globally; from a portfolio perspective, increasing gold allocation helps diversify risk and reduce overall volatility. In the future, Ping An Life will continue to adhere to prudent allocation and risk control within regulatory limits, improve its gold investment research and infrastructure, and further optimize its diversified asset allocation structure.

Lu Xiaoyue stated that gold, as an interest-free asset, mainly provides inflation hedging. From mature international markets, large European insurers often allocate gold for ultra-long-term pension funds, with some holding periods spanning decades across multiple economic cycles, where gold acts as a ballast in matching such liabilities.

However, international experience must be adapted to domestic realities.朱俊生 pointed out that domestic insurers should consider their own characteristics when drawing on European experience. For example, since gold does not generate interest or dividends, it can drag down current earnings under China’s current assessment system, requiring policy adjustments to better buffer the downward pressure from declining interest rates. Additionally, given the product structure and capital stability, short-term financial or high-liquidity products still dominate, with higher redemption risks, which may conflict with gold’s “long-term holding, short-term volatility” nature. This also indicates that gold allocation tests the maturity of insurers’ asset-liability structures.

Looking ahead,朱俊生 believes that if initial pilot investments show that gold allocation does not significantly impair solvency and can improve portfolio risk structure, it could set a demonstration effect. Future expansion of the pilot is highly likely but will proceed cautiously and gradually. He recommends gradually expanding coverage based on pilot results, incorporating gold into the routine investment categories of insurance funds.

On regulatory policy,朱俊生 suggested: first, optimize the solvency framework and reasonably lower the risk factor for gold investments; second, improve accounting treatment to reflect long-term fluctuations through comprehensive income, reducing impact on current profits; third, guide insurers to deeply integrate gold allocation with liability duration management to prevent short-term, trading-oriented behaviors.

“The safer approach is to implement small, gradual allocations during the pilot phase, and only after institutional and market conditions mature, increase its strategic weight in the asset mix,”朱俊生 said. Whether gold is worth allocating long-term depends on whether the insurer’s liability structure permits it. The proportion to allocate depends on regulatory environment and the maturity of the insurer’s internal governance.