Select Language:
China’s technology hub has introduced new regulations targeting illegal activities in the gold trading sector. These rules ban companies from participating in unlawful gold price-fixing, leveraged trading, deferred settlements, and other unauthorized trading practices designed to safeguard investors and stabilize the local gold market.
Firms are prohibited from using online platforms such as WeChat groups, mini programs, mobile apps, or websites to allow customers to pay deposits in exchange for locking in gold prices under the guise of gold recycling or pre-priced sales. In these setups, payments are later settled based on market fluctuations, positions can be closed at will, and no physical gold is actually transferred.
These so-called “pre-priced” models have often operated under the guise of physical gold trading, making regulatory oversight more challenging. However, rising gold price volatility has made the risks more obvious, leading authorities to enforce stricter oversight, industry experts note.
Previous reports indicated that some precious metals firms operating on Shenzhen’s trading platform were involved in quasi-futures schemes labeled as gold transactions. Investors could participate by paying a small deposit of around 2.4 percent to engage in high-leverage trades. Recently, several platforms offering pre-priced gold have faced difficulties with redemption processes.
The regulator emphasized that companies are not allowed to engage in illegal fundraising by promising fixed returns or guaranteed principal through schemes involving gold custody, leasing, or buyback arrangements. They also must avoid unlawful gold-entrusted investment activities—such as convincing consumers to purchase gold physically but diverting funds into investment plans instead of delivering the gold.
A core issue is that many of these businesses are illegally engaging in gold “investment” activities with characteristics similar to futures trading, under the pretense of physical gold trading. This blurs the distinction between financial and non-financial transactions, complicating the regulatory process.
Industry insiders interpret this move as a clear effort by authorities to better define and identify these models’ illegal features. Experts assert that stricter regulation of precious metals raw material trading on platforms like guijinshu is inevitable. Future enforcement will likely emphasize administrative measures, with criminal penalties being a secondary focus.
Current regulatory efforts primarily target two activities: pre-pricing practices resembling futures trading and gold-backed financing schemes. Both involve significant financial components. On the other hand, spot trading, physical pre-orders with definite delivery timelines, deferred settlements, and trade-in models may still be permissible under the new regulations.
ChatGPT
Perplexity
Gemini AI
Grok AI
