Core Viewpoint - The article discusses the emerging risks associated with a high-leverage trading model in the gold market, particularly focusing on the case of Shenzhen's Yue Baoxin Precious Metals Co., which has reportedly ceased operations, leaving many merchants unable to retrieve their funds and gold materials [3][4][10]. Group 1: Trading Model and Risks - In the Shenzhen Shui Bei gold market, a pre-order pricing trading model allows buyers to lock in gold prices by paying a deposit of approximately 2.4% to 3% of the actual gold price, significantly lower than the typical 10% margin required for gold futures trading [4][12]. - This model has led some traders to engage in speculative practices, such as short-selling, where they do not purchase the corresponding gold immediately, hoping to buy it back at a lower price later [4][20]. - The leverage in this trading model can reach 30 to 50 times, as evidenced by a case where a buyer pays only 20 yuan to lock in the price of 1 gram of gold, which is significantly less than the required margin in standard futures trading [16][18]. Group 2: Incident of Yue Baoxin - Yue Baoxin, established in August 2023, abruptly closed its doors, citing the freezing of company bank accounts and the disappearance of its legal representative, leading to significant financial losses for its clients [6][9]. - Reports indicate that the company may have been involved in risky trading practices, with clients unable to retrieve their gold or funds, resulting in police investigations [7][10]. - The incident has sparked rumors of a broader trend of "material merchants" fleeing the market, although the Shenzhen Gold and Jewelry Association has stated that many businesses continue to operate normally [11][12]. Group 3: Legal and Regulatory Implications - The trading practices employed by companies like Yue Baoxin may be classified as illegal operations or fraud, as they involve collecting deposits without actual gold reserves or hedging capabilities, potentially constituting contract fraud [28][29]. - Legal experts suggest that the nature of these transactions resembles futures trading, which is subject to strict regulations, and could lead to significant legal repercussions for those involved [29][30]. - Historical cases have shown that similar trading models have been deemed illegal by courts, reinforcing the potential for severe legal consequences for companies engaging in such practices [30][31].