Against the backdrop of rising gold prices in the Year of the Snake, long lines have formed outside Laopu Gold, attracting numerous consumers and investors. This phenomenon not only reflects people's demand for both consumption and investment in gold but also reveals Laopu Gold's unique positioning in the luxury goods market.

People are willing to wait for hours primarily because the markup on Laopu Gold's products is relatively low compared to market gold prices. This allows both retailers and scalpers to profit within this interest chain. Meanwhile, the continuous rise in gold prices makes Laopu gold ornaments appear more "affordable," leading consumers to feel they are getting good value for their purchases. This situation transforms gold into not just a precious metal but also a luxury item under the magic of brand operation. In stark contrast, traditional diamond businesses appear powerless in the face of advances in synthetic diamond technology, as synthetic and natural diamonds are nearly indistinguishable in physical composition. The scarcity of gold, derived from its unique formation process in the universe, grants it an irreplaceable status in the luxury goods market.

If we view traditional luxury items as "equity assets," then Laopu Gold can be likened to "convertible bonds." Although Laopu Gold's products come at a high price, they are backed by the physical value of gold, providing additional liquidity and convertibility. Even if the value of the Laopu brand diminishes, the gold ornaments owned by consumers can still retain their market value.

The success of Laopu Gold also lies in its characteristic of natural scarcity, which sharply contrasts with the "artificial scarcity" of traditional luxury goods. While top luxury brands create a sense of scarcity through design and storytelling, their business models often rely on brand management and market strategies. Laopu Gold, on the other hand, enhances its market appeal by leveraging the inherent scarcity of gold itself. For luxury consumers, Laopu Gold offers a new option. Many consumers are willing to seek out Laopu gold ornaments from SKP in Beijing during the Spring Festival, even at a discount. This high markup actually strengthens consumers' willingness to hold onto their purchases, reducing the urgency to sell in response to fluctuations in gold prices, thereby alleviating market inventory pressure.

As gold prices continue to rise, Laopu Gold attracts more traffic; conversely, when gold prices begin to decline, its unique pricing model provides greater profit margins. Each increase in gold prices could present an opportunity for Laopu Gold to raise its prices.

According to Bain & Company’s estimates, the sales of luxury goods in mainland China are expected to decline by 20% in 2024. This "elastic downgrade" in luxury consumption creates favorable conditions for the rise of Laopu Gold. The combination of "artificial scarcity" and "natural scarcity" showcases a new model for luxury goods based on expensive materials.

Ultimately, this phenomenon indicates that the market may underestimate the enormous commercial potential inherent in natural scarce materials in the era of fiat currency. The brand story built around precious metals highlights their unique scarcity and luxury. In the future, although brands may fade with time, the value of gold will endure.

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（Source: uSMART HK）