Gold and jade are on the outside, but there is decay and lint on the inside.
Basic meaning: gold and jade: a metaphor for beauty; bad cotton: rotten cotton. It looks like gold and jade on the outside, but it's like tattered cotton wool on the inside. The metaphor looks gorgeous on the outside but a mess on the inside.
Source: Ming Dynasty Liu Ji's "Sincerity Bo Ji·Speaking of Mandarin Sellers": "Looking at those sitting in high halls, riding big horses, drunk and drinking fat and fresh food, who is not towering and terrifying? It’s so impressive that it’s like nothing else, but there’s nothing like gold and jade on the outside, and there’s nothing like it on the inside!”