With a flood of headlines referencing the gemstone heist movie Crazy Stone, China's news media has turned its attention to the jade business in Xinjiang. The price of white Hotan jade has skyrocketed in recent years, bringing floods of people to the Yurungkash River, where they sift through the stones of the riverbed in search of treasure.

Last year at this time, when Hotan jade was selling for "up to $120 a gram," hordes of people were already hunting for the stuff. Mark Magnier wrote this in the Los Angeles Times in September, 2006:

According to state-run media, more than 80 percent of Hotan's jade has been exploited, with some reports suggesting the supply could be depleted within three to five years. As many as 20,000 treasure seekers and 2,000 pieces of heavy equipment are said to be working the area, they say, leaving gashes in the ground as deep as 30 feet

Now there are as many as 100,000 people hunting for jade in the area. It's not hard to understand their enthusiasm. A cover feature in China Newsweek's 15 October issue reported that in the 1980s, the price of mined jade (more plentiful but less valuable than river jade) was just 80 yuan per kilo; by 1997-98, it was up to 1500 yuan. In 2004, it had reached 8000 yuan, and this year, the price of mountain jade has averaged 50,000 yuan per kilo. River jade has quadrupled in price since mid-2006.

But not everyone's getting rich. Earth-moving equipment rents for 2000-3000 yuan per day, and prospectors are sifting through the same mountains of stones that countless others have already worked over. A number of people quoted in the China Newsweek article say that perhaps 20% of jade-seekers turn a profit, while 30% break even and at least half lose money.

Reuters relates reports from the Chinese media that the local government is cracking down on the practice:

The situation had prompted authorities to issue a notice to "clean up" the phenomenon, and slap fines of up to 10,000 yuan ($1,300) on private prospectors who ignored orders to withdraw from the river.

But due to the large river area and widely-scattered nature of the jade deposits, the clean-up would be "difficult," the paper said, citing an local official.

Speculation in jade has taken off as well, with the expected range of winners and losers. Yi Shuangting, secretary of the Xinjiang Gemstone Association, says that after writing a guide to Xinjiang's gemstones and jade in the mid-80s, he was offered an 18-kilo chunk of mutton-fat Hotan jade for 180 yuan, more than twice his monthly salary at the time. Last year, a Beijing businessman approached him to appraise a 70-kilo piece that was listed at more than 3 million yuan. That piece turned out to be fake.

Yesterday's Mirror ran an op-ed comparing the current jade fever with previous bubbles:

The rocketing price of Hotan jade stems on the one hand from the non-renewable nature of jade itself, and on the other, from the multiple levels of price-hikes involved in reselling and speculation. We can't help but wonder: after clivias, Pu'er tea, and Hotan jade, what will be the next thing to go crazy?

Indeed, as China Newsweek said: Pu'er, gold, jadeite, larderite, Shoushan stone, antiques, calligraphy...as investments run wild and as the value of all sorts of investments rises all over, the upward motion Hotan jade is a typical example. Behind the spread of jade culture lie the longings of an impoverished area and an all-out pursuit of GDP. Citizens who are gradually becoming wealthier have a warped understanding of the rise in value of their own property: "I may not be able to outrun Liu Xiang, but at least I can outrun the Consumer Price Index."

Spotty understanding of market rules and a jumbled awareness of the rules that govern economic development have led to our countrymen's investment frenzy. How to increase the value of one's property after one has become wealthy has become a critical issue for them. On the one hand, it represents the people's confidence in China's economic development, but on the other, people who lack necessary financial knowledge and training will find it hard to avoid following panicked opportunism into a blind group frenzy of trend-chasing investment practices.

Compared to the stock market, Hotan jade, like clivias and Pu'er tea, is just a "host" or a symbol of the masses' opportunistic investing. This writer believes that under the present circumstances, the government should spare no effort to undertake financial education for the public.

To borrow a maxim from the stock market, there's risk in jade, so investment should proceed cautiously. We may not be able to prevent whatever comes after Hotan jade from becoming a "craze" or a "host," but we can at least stave off the frenzied assault and blind investment, and in doing so we can educate the public about the causes and effects of investment crazes so that they can avoid such risks in the future. If we can do this, then the "Crazy Hotan Jade" will have been crazy for a reason.