Asian Investors Diversify: Family Offices Directly Engage in the Global Gold Trade
By Archyde Newsroom
Updated: August 16, 2025
In a notable shift within the wealth management landscape, affluent families across Asia are increasingly bypassing traditional intermediaries to directly participate in the physical gold market. This trend sees family investment offices taking on financing, transportation, and sales of bullion, acting as elegant operators in the global gold business.
The Gold Rush among Asia’s Ultra-Rich
This strategic pivot is exemplified by Cavendish Investment Corp., a multi-family office that has allocated approximately one-third of its portfolio to the direct physical trade of gold. This move signifies a departure from traditional roles of gold as merely an index-based hedge or a custodial asset. Industry players like J. Rotbart & Co. and Goldstrom are also reporting meaningful engagement with ultra-high-net-worth families in the region, indicating a broader trend.
“We are in a seller’s market,” stated Jean-Sebastien Jacquet, managing partner at Cavendish. He anticipates this opportunity to capitalize on the current market dynamics will likely last for about a year. This proactive approach stems from a period of heightened global uncertainty,including geopolitical tensions,inflationary pressures,and shifting central bank policies,which have reignited demand for gold.
The surge in interest is especially pronounced in Asia.A survey from HSBC in 2025 revealed that investors in Hong kong have more than doubled their allocation to precious metals within a year. Similarly, in mainland China, a separate survey of over 10,000 wealthy individuals across 12 markets showed a significant increase, with gold holdings rising from 7% to 15% of portfolios in the same period.
Cultural Affinity and Financial Ingenuity
Joshua Rotbart, founder of J. Rotbart & Co., noted that Asian families possess a more profound, culturally ingrained understanding of gold’s value compared to their Western counterparts. “They understand that they must make this investment as a business,” he remarked, highlighting a perception of gold not just as a store of value but as an active investment vehicle.
Beyond direct trading, some families are exploring innovative ways to leverage their gold holdings. Billionaires in the UAE and Hong Kong are reportedly lending physical gold to local jewelers, generating returns of 3% to 4%. This strategy transforms a traditional safe-haven asset into a source of compounding interest. Others are entering into profit-sharing agreements or engaging in arbitrage, buying gold at a discount in markets like Dubai and selling it in high-demand hubs like Hong Kong, where logistics are optimized.
«In Asia,everyone buys gold in much larger proportions than in the West,» stated Patrick Tuohy,Executive Director of Goldstrom. «People keep gold becuase they know they can always liquidate it on a rainy day.»
Market dynamics and Future Projections
The current economic climate, marked by a fluctuating U.S. dollar and potential Federal Reserve rate cuts,further enhances gold’s appeal. A weaker dollar typically makes dollar-denominated assets like gold more attractive to international buyers. Financial institutions are projecting a bullish trend, with Deutsche Bank forecasting an average price of $3,700 per ounce in 2026, while Goldman Sachs Group Inc.anticipates prices could reach $4,000, up from approximately $3,375 in early August 2025.
The strength of the Hong Kong dollar is also a factor, with some experts suggesting that physical gold offers a hedge for this currency, given its perceived limited autonomy. China’s recent launch of its first extraterritorial gold vault in Hong Kong aims to bolster the city’s role as a crucial gold hub in Asia.
| Strategy | Description | Potential Returns |
|---|---|---|
| Direct Physical Trading | Family offices finance,transport,and sell gold directly. | Market-driven premiums. |
| Gold Lending | Lending physical gold to jewelers. | 3%-4% annual returns. |
| Arbitrage | Buying gold at lower prices and selling at higher prices in different markets. | Profit from price differentials. |
| Collateral Use | Using physical gold to secure loans for other investments. | Leverage for stocks, crypto, real estate. |
Navigating Challenges in the Gold Market
However, the burgeoning gold trade is not without its complexities. regulatory compliance is a key concern, particularly regarding the sourcing of gold. Only two refineries in Hong Kong are accredited by the London Bullion market Association (LBMA), an influential body that vets gold for conflict-free and environmentally responsible sourcing. Many global buyers, including central banks and institutional investors, exclusively accept LBMA-certified gold.
this poses a challenge for sourcing gold from regions like Kenya, which has been identified as a transit hub for gold from other African nations, possibly including Sudan, where ongoing conflict raises ethical and legal questions. Cavendish Investment Corp. works with Ramco Ltd. to ensure compliance with Hong Kong law and quality sourcing. Experts warn that trading unrefined gold is highly risky and requires extensive market knowledge and robust connections with legitimate players.
When you know exactly what you are doing, it is indeed mechanical and very lucrative.
cautioned Tuohy. But there is a huge gap between not knowing exactly what you do and having a proven work process. And that lack of experience can cost you thousands, if not millions, of dollars.
The sustainability of current high gold prices is also a subject of debate. After a significant rally in the past year, maintaining these levels might become challenging, potentially pricing out cost-sensitive buyers and impacting jewelry demand in major markets like China and India. Jacquet anticipates a market cooldown within approximately a year, potentially as geopolitical tensions subside leading up to the U.S. elections in 2026.
Despite potential future cooling, the immediate profitability is considerable. Cavendish and its partners are reportedly achieving premiums of 5% to 10% per shipment. The process involves rigorous analysis before export, followed by further refinement and distribution to private vaults or buyers on the mainland, including state-owned enterprises.
Given the level of premiums people are willing to pay for gold, this will attract more and bigger players,
noted Mai from West Point Gold.
Evergreen Insights: The Enduring Appeal of Gold
Gold has historically served as a hedge against inflation and economic instability. Its intrinsic value, tangible nature, and global acceptance as a medium of exchange make it a cornerstone of diversified investment portfolios.
The current trend of direct engagement by family offices underscores a broader shift towards tangible assets in an era of digital finance and fluctuating fiat currencies. Understanding the complexities of the gold market, including sourcing, refining standards like LBMA certification, and regulatory environments, is crucial for any investor looking to navigate this sector successfully.
As Quentin Neve, Executive Director of West Point Gold, stated, gold’s value proposition remains strong, especially in regions seeking currency hedges or a reliable store of value amidst economic uncertainty.
Did You Know? The London bullion Market Association (LBMA) plays a critical role in setting standards for the global gold market, ensuring the quality and ethical sourcing of precious metals. Only gold refined by LBMA-approved institutions is typically accepted by major institutional investors and central banks.
Pro Tip: When considering direct investment in physical gold,always prioritize clarity and verifiable provenance. Partnering with reputable dealers and understanding the associated costs, including refining, storage, and insurance, is essential for a secure investment.
Frequently Asked Questions About Gold Investment
- What are the main reasons asian investors are increasingly engaging directly in the gold business?
- Asian investors are directly engaging in the gold business due to its traditional cultural significance,as a hedge against inflation and economic uncertainty,and to capture potential premiums by bypassing intermediaries.
- How are family offices investing in gold differently now?
- Family offices are now directly financing, transporting, and selling physical gold, moving beyond passive investment to active trading and leveraging their holdings through lending and arbitrage.
- What are the potential risks associated with trading unrefined gold?
- Trading unrefined gold carries significant risks, including market volatility, regulatory non-compliance, and potential issues with provenance or quality, which can lead to substantial financial losses.
- What is the role of the LBMA in the gold market?
- The LBMA sets industry standards, accredits refineries, and maintains a “Good Delivery List” of acceptable gold. Their accreditation ensures that gold meets stringent quality and ethical sourcing requirements, making it acceptable for major global buyers.
- Are there concerns about the sustainability of current high gold prices?
- Yes, there are concerns that the recent rally might not be lasting, potentially leading to a market cooling and impacting demand from price-sensitive consumers, especially in jewelry markets.
- How can investors ensure the authenticity and quality of gold they purchase?
- Investors can ensure authenticity and quality by purchasing gold from reputable dealers, verifying LBMA certification for refined gold, and understanding the provenance and sourcing of the metal.
What are your thoughts on the growing trend of direct gold investment by family offices? Share your insights in the comments below!
