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].