The Dark Side of China’s Gold Frenzy
Chinese investors have poured their savings into gold, attracted by promises of rising prices. One company’s sudden closure is a cautionary tale.
By Joy Dong and Daisuke Wakabayashi, The New York Times, June 18, 2025
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Last month, Ms. Li and thousands of other Yongkun Gold investors were supposed to receive a payout from their accounts. Instead, the company halted all withdrawals and shuttered its shops. Its headquarters in the eastern Chinese city of Hangzhou closed, and the company stopped responding to calls and messages…
Yongkun offered what seemed like a no-risk opportunity. Investors could order gold bars online and, after several weeks, either take delivery of them or sell them back to the company. They would pocket a profit if the price had risen, and if the price had fallen, Yongkun guaranteed to buy back the gold at the original purchase price, according to Ms. Li.
Customers who bought more than $400,000 worth of gold were promised an annual return of 9 percent.
Investors were given certificates attesting that the gold was stored in vaults at a branch of the state-owned Bank of China. However, when reached by phone, a representative for the bank branch, who gave only the surname Wang, said neither Yongkun Gold nor its affiliated companies had deposited gold there… [end quote]
If it was so easy to verify that Yongkun Gold didn’t actually have gold deposited why didn’t the investors double-check?
Personally, I don’t trust anyone to hold my gold except myself. GLD (SPDR Gold Trust) may be more convenient and liquid than physical gold but I don’t trust them regardless of the rules. Who audits them to make sure the gold is really there?
Wendy