After gold prices crumbled last week, Chinese investors turned out in droves to scoop up the precious metal on hopes that a price rebound was just around the corner.

With few sensible places to put their money, Chinese capital holders are still all too keen to speculate on gold and other assets which might help them maintain the value of their wealth and hedge against inflation.

For the most part, people on the Chinese mainland have long had to rely on fix-income investments and stocks as their only alternatives to low-interest bank deposits.

But as more fraud cases come to light centering on mutual funds and wealth management products, local investors are losing confidence in these once-promising vehicles. Similarly, prolonged bearishness at the equities market has pulled investors off risk.

Until more sound vehicles become available, China's investing public will continue to irrationally gobble up any and all investment opportunities which hold the potential for decent returns.

The author is Zhou Junsheng, an economic commentator.

Source: Southern Metropolis Daily