For those wondering why Setser strips gold imports out of China’s trade data, the reason is that gold can be purchased for two very different purposes. You can buy it for jewelry or manufacturing, or you can buy it as a store of value, much like buying a gold ETF, government bonds or property. The former is clearly a current-account transaction; the latter, when the asset is foreign, is a financial-account transaction. The official balance-of-payments rules, however, do not make this distinction for physical gold. Nonmonetary gold is recorded as a good whether it is used for jewelry or held as a store of value. A foreign gold ETF is unambiguously an acquisition of a foreign financial asset, but an imported gold bar can be an almost perfect economic substitute and is nonetheless recorded as an import of goods. This matters for China, especially in recent years. Chinese jewelry demand has collapsed relative to investment demand: in the first half of 2026, bar-and-coin demand reached a record 314 tons, more than twice the 136 tons of jewelry demand. So Setser is making an analytical adjustment. Much of the recent surge in Chinese gold imports appears to reflect a shift in household and investor portfolios toward gold rather than a comparable increase in demand for goods and services. That is why stripping gold out of the trade balance can give us a better picture of the underlying goods imbalance.