Jie Wo Rui: Peek into China's online gold trading platform's crisis

The Chinese gold trading community has been buzzing after hundreds of investors of Jie Wo Rui—a small gold retailer and online trading platform—expressed angst for being unable to withdraw funds or make metal purchases.

This comes as rising demand for precious metals in China disclosed significant stress points within the country's gold trading landscape.

As reported by GuruFocus, protests erupted outside the Shenzhen offices of Jie Wo Rui, wherein people participated from distant regions with their families after learning that the platform might be facing cash-flow issues.

The Jie Wo Rui gold trading issues also led to confrontations with police, which were captured and shared by participants.

What is Jie Wo Rui?

Jie Wo Rui in China is one of numerous small and medium-sized platforms that have leveraged social media to attract retail investors eager for rapid gains from gold's recent spike, which has outperformed equities and cryptocurrencies.

The turmoil coincides with China witnessing record inflows of bullion-linked investment products. 

In a single day on Friday, over 6 billion yuan flowed into the country’s four largest gold-backed exchange-traded funds, marking the highest daily inflow on record as gold prices surged nearly 30% year-to-date.

Domestic gold rates for gold and silver surpassed international benchmarks before collapsing substantially, while silver and copper touched all-time highs.

In response to the public outrage, local authorities in Shenzhen have constituted a special task force to monitor Jie Wo Rui's operations.

The company’s owner and management are said to be verifying claims and working on repayments.

Legal experts warn that similar platforms have faced issues recently, with losses exceeding 10 billion yuan.