Core Viewpoint - The Shenzhen Gold and Jewelry Industry Association issued a warning letter regarding three gold jewelry companies in Shenzhen's Shui Bei area, which have been investigated for suspected illegal gambling activities, highlighting the legal risks associated with the long-standing "pre-priced" trading model in the industry [1][2]. Group 1: Industry Risks - The warning letter indicates that these companies engaged in "non-physical gold betting" under the guise of gold trading, which has led to criminal charges of operating a gambling house [2]. - The pre-priced trading model allows investors to participate in high-leverage transactions with a deposit as low as 2.4% of the actual gold price, significantly lower than the typical 10% margin required for standard gold futures trading [5][6]. - As gold prices continue to rise, the risks associated with the pre-priced model are accumulating, with the current price of London gold reported at $4,017 per ounce, reflecting a year-to-date increase of over 50% [6]. Group 2: Legal Implications - The classification of the pre-priced trading model as a criminal offense depends on the specific trading practices employed by the platforms, which could lead to different legal consequences such as illegal business operations, gambling offenses, or operating a gambling house [1][7]. - Legal experts suggest that the trading models can be categorized into three types: "positive hedging," "reverse hedging," and "fake orders," each carrying different legal implications [8][9]. - The presence of physical gold delivery in transactions may complicate the legal classification, potentially affecting the determination of charges and penalties [9].

Core Viewpoint - The Shenzhen Gold and Jewelry Association issued a warning letter regarding three gold jewelry companies suspected of operating illegal gambling activities under the guise of gold trading, highlighting the legal risks associated with the "pre-set price" trading model prevalent in the industry [2][3]. Group 1: Industry Overview - The warning letter indicates that these companies were found to be conducting "non-physical gold betting" through online platforms, which has led to criminal charges of operating a casino [3]. - The pre-set price trading model allows investors to participate in high-leverage trading by paying a deposit as low as 2.4% of the actual gold price, significantly lower than the typical margin of over 10% in standard gold futures trading [6][7]. Group 2: Legal Implications - The classification of these trading activities as criminal offenses depends on the specific trading model used by the platforms, which could lead to different legal consequences such as illegal business operations, gambling offenses, or operating a casino [8][9]. - Legal experts suggest that the trading models can be categorized into three types: "positive hedging," "reverse hedging," and "fake orders," each carrying different legal implications [9][10]. Group 3: Market Risks - The ongoing rise in gold prices, with London gold currently at $4,017 per ounce and a year-to-date increase of over 50%, has exacerbated the risks associated with the pre-set price model, leading to potential payout crises and company bankruptcies [7][8]. - Some platforms have begun to open these high-risk trading activities to retail investors, using social media to create a false sense of trading activity and attracting inexperienced investors [7].