The old shop gold has paved a new model for luxury goods

In the Year of the Snake, gold prices are rising, and long queues are forming in front of old gold shops.

Among the gold seekers, there are high-net-worth women with both consumption and investment preservation needs, as well as scalpers turning SKP points into cash for profit.

However, the main reason people are willing to queue for hours is primarily due to the markup rate of old gold products compared to gold prices.

On one hand, shopping malls and scalpers have enough room to share in this profit chain; on the other hand, the continuous rise in gold prices at the beginning of the year has made the "fixed-price" old gold jewelry seem somewhat "affordable."

People can hardly distinguish whether it is the precious metals that have transformed into luxury goods under the magic of brand operation, or whether the originally expensive old gold has begun to highlight its "cost-effectiveness" amid rising gold prices.

This chemical reaction of coexistence between precious metals and luxury goods has made the diamond business, often criticized as a "Ponzi" scheme in the jewelry industry, appear even more weak and powerless.

After the rapid penetration of synthetic diamond technology, traditional diamonds face the threat of indistinguishable substitutes in a physical sense; after all, they are all elemental carbon crystals.

In stark contrast, as a legacy element from supernova explosions or neutron star collisions, gold possesses extraordinary scarcity even on a solar system scale.

To draw a comparison, if traditional handbags, positioned as social currency and embodying consumption upgrades while fulfilling emotional value, are seen as "equity assets" among luxury goods, then old gold, which operates as a brand using gold as raw material, resembles "convertible bonds" in the luxury sector.

Just as convertible bonds have a "debt floor," old gold, although expensive, is additionally coated with a layer of "golden floor."

A common knowledge in marketing is that any brand has a limited depreciation period.

Even strong brands like Hermès Birkin, the long-circulated 2.55 handbag, or the vintage Flying Moutai, cannot have their brand premium duration extended indefinitely.

No matter how high the moat appears, it must still bear the annual loss of 2% of the population from the consumer market, face the threat of forgetfulness due to changing times, and contend with new choices that young people may develop; otherwise, the stock prices of companies like LVMH cannot form any credible valuation.

However, having a "golden floor" means that one day, even if the brand value of old gold dissipates, the gold jewelry held by consumers will still possess liquidity and cashability due to the physical properties of gold.

Before old gold gained popularity, the luxury goods industry was more about "artificial scarcity."

Top luxury brands tell stories to their audience through product design, aesthetic art, lifestyle, and brand style, but behind the scenes, their operations rely on brand management, community marketing, channel management, inventory control, and the routine of price increases.

Old gold certainly also relies on these traditional skills, but beyond that, the luxury business built around gold enjoys an additional layer of "natural scarcity" as a protective trait.

No matter how powerful the brand IP is, it cannot withstand the stability brought by gold in a physical law sense; even the thriving BTC must face challenges and washouts from new tokens every year.

For those keen on luxury consumption, they clearly have an additional reason to choose old gold This seems to explain why many people in Shanghai are willing to find purchasing agents in Beijing during the Spring Festival, just to grab a piece of old shop gold jewelry at a 10% discount.

The high premium extends people's holding willingness, and the foundation of gold makes consumers less eager to sell in the face of price drops, indirectly curbing the accumulation of social inventory.

The continuous rise in gold prices has attracted more traffic to old shop gold; when gold prices begin to fall, the special pricing model will instead provide greater gross profit space; and every future rise in gold prices may become an opportunity for price increases.

According to Bain & Company, the sales decline in the mainland China's luxury goods market is expected to reach 20% in 2024.

The "elastic downgrade" of luxury consumption constitutes the broader context for old shop gold to break out.

The combination of "artificial scarcity" and "natural scarcity" represents a new model distinct from traditional bag and jewelry consumption, based on "attached to expensive materials" luxury business.

The insight for the industry may be that the market underestimates the enormous commercial potential contained in naturally expensive materials in the era of fiat currency—around those universal precious metals, a scarce and luxurious brand story can actually be told.

In the long river of future history, brands may eventually fade away like Dutch tulips, but at least gold will not