The new AML regulations have arrived! Starting from August 1, cash purchases of gold exceeding 100,000 yuan must be reported!

The biggest advantage of physical gold is that it is both a natural currency and has good liquidity and anonymity. Now, there is a focus on targeting anonymity.

The liquidity of physical gold goes without saying, as large transactions and exchanges can be easily realized with a small volume.
The anonymity of physical gold is actually easy to understand, because physical gold does not have serial numbers like physical banknotes, nor can it leave traces like online transactions. Additionally, gold can be divided or re-melted at any time, so once a piece of physical gold is traded, it is actually very difficult to trace, and there is fundamentally no way to lock in its next transaction.

So we see that the content stipulated by this new regulation actually adds a "cash" condition, which is "cash purchases of gold exceeding 100,000 yuan must be reported." The key point is that transactions based on fiat currency are traceable.
So this new regulation is not an isolated measure, but rather a part of a systematic crackdown.

In fact, with the continuous strengthening of various measures under the guise of anti-fraud in recent years, the traceability of fiat currency transactions has become increasingly stronger. Firstly, the difficulty of obtaining physical currency has already increased significantly; simply implementing "large cash withdrawal appointment registration" and "setting ATM withdrawal limits" can greatly restrict withdrawal behaviors, thus making it much easier to identify the remaining, less frequent withdrawal activities. The same reasoning applies to the limits on non-counter transfers, which I will not elaborate on.

Most trading activities are still conducted through fiat currency, and the price of gold denominated in fiat currency is constantly changing, making it even more difficult to find another general equivalent for gold transactions. A regulatory framework for fiat currency has already been established, and the conditions are now ripe, which is why new regulations regarding the anonymity of physical gold transactions can be issued.

In other words, controlling fiat currency essentially means controlling the anonymity of gold.

It is becoming increasingly common for the regulation of precious metal trading to be more stringent worldwide. Moreover, domestic gold trading hubs like Shenzhen have started to strengthen the regulation of gold trading since last year, requiring real-name registration for transactions above a certain amount. The new regulations are not entirely new; they are just an expansion of the real-name registration requirement on a larger scale.

The new regulations mention that strengthening the supervision of gold transactions is to combat AML. In fact, money laundering does not necessarily require the attributes of a "general equivalent"; items like artworks, luxury goods, and antiques, which are very clearly "non-standard goods," are often used in money laundering crimes.

Of course, we are not denying that some criminals do indeed use the anonymity of physical gold for Money Laundering, but we should also note that the anonymity of physical gold can actually be used for tax evasion, and this demand is a basic necessity for "general equivalents" that cannot be shifted to non-standard products—this is actually another layer of intention behind strengthening the regulation of gold transactions that is not explicitly stated.

Therefore, the demand for the anonymity of physical gold will only be suppressed by the new regulations, rather than disappearing altogether. Thus, before the new regulations are fully implemented, there will be a wave of buying demand driven by those trying to get ahead, and the selling behaviors associated with these purchases will create a relatively short long-tail effect; in the long term, what kind of substitutes can provide (relative) anonymity, possess monetary attributes, and also have good liquidity?