China’s gold investment boom faces dark turn after Yongkun Gold shutdown

Chinese investors have poured their savings heavily into gold, driven by rising prices and promises of secure returns. But the sudden closure of Yongkun Gold, a company popular among individual investors, has sent shockwaves through the market, serving as a stark warning.

Julie Li, a 28-year-old customer service agent from Sichuan Province, invested about $35,000 in gold bars through Yongkun Gold roughly a year ago. Encouraged by steady gains, she later added $20,000 using her credit card. “That’s all my savings,” Ms. Li said. “The salesperson kept telling me that gold prices will keep rising”, Caliber.Az reports via The New York Times.

Yongkun Gold operated both an online platform and multiple retail stores across eastern China. The company promised investors risk-free profits: investors could buy gold bars online and later either receive delivery or sell the gold back at the original purchase price if prices fell. For purchases exceeding $400,000, a guaranteed 9 per cent annual return was offered. Certificates claimed the gold was stored in vaults at a branch of the state-owned Bank of China, though the bank denied any association.

The enthusiasm of investors like Ms. Li has fueled record high gold prices. In the first quarter of this year alone, Chinese investors purchased about 124 metric tons of gold bars and coins, a 12 per cent increase over the previous year and the highest globally, according to the World Gold Council.

However, last month, Yongkun Gold halted all withdrawals, closed its stores, and shut down its Hangzhou headquarters without explanation. Investors nationwide, including retirees in China’s largest gold-producing regions, now face potential losses of their life savings. Fu Yindi, a college student from Shandong Province, said her father invested over $200,000, believing the gold was safely stored in bank vaults. “They believed the gold could keep its long-term value,” she said. “But now they can’t recover the money they saved.”

Local authorities have launched a criminal investigation amid fears of social unrest. Dozens of investors gathered to protest in Hangzhou but were met by police; some were detained or warned against further demonstrations. Many investors have taken to social media to voice their grievances, with the hashtag “yongkungold” amassing around 30 million views on Douyin, China’s TikTok.

This crisis highlights growing mistrust among Chinese investors in traditional markets amid economic uncertainty and a sluggish property sector. As gold becomes an attractive alternative, experts warn of the risks posed by unscrupulous firms exploiting investors’ confidence.

Attempts to contact Yongkun Gold’s founder, Wang Guohai, have been unsuccessful, and the company has remained silent. Meanwhile, affected investors like Ms. Li await answers—and hope to recover their lost savings.

By Naila Huseynova