China’s gold trading hub rattled as second platform faces payment crisis

Following the sudden demise of a major gold trading platform in the southern Chinese city of Shenzhen, another retail-focused operator has suffered a run, stoking fears of contagion in China’s private market for the precious metal.The platform, Ydd007, is the latest to face trouble. On Sunday, it told investors that it had experienced three “severe runs” in recent days amid mounting industry panic. It also acknowledged a significant funding shortfall, according to Chengdu.cn, part of the Chengdu municipal government's media office.Since Saturday, investors from Guizhou, Jiangxi and other provinces have travelled to Ydd007’s office in Shenzhen’s Shuibei – widely regarded as the heart of China’s private gold trade – to demand immediate payouts, the report said. The incident came right after a redemption crisis at Shuibei’s JWR, an online metals trading platform.The turmoil coincided with global volatility in gold and silver prices. Both suffered a historic sell-off last week, with the gold price plunging nearly 10 per cent on Friday – the biggest single-day decline in decades – before partially recovering on Tuesday.On Wednesday, authorities in Shenzhen’s Luohu district announced that a task force would investigate abnormal business operations at JWR, where unpaid funds could exceed 10 billion yuan (US$1.4 billion), based on investor estimates reported by mainland media outlets.Shuibei is home to a large share of the country’s wholesale, processing and pricing activity for gold, and its stability has long been regarded as a barometer for the domestic industry.