Summary of Key Points
Recently, several banks have made significant adjustments to their personal precious metals services: Industrial and Commercial Bank of China (ICBC) announced that it will discontinue personal precious metals bidding transactions (including leveraged deferred contracts) by July next year, with existing customers only being able to close positions but not open new ones; Postal Savings Bank of China and Guangfa Bank have completely ceased this service; while China Construction Bank, Agricultural Bank of China, and Bank of China have significantly increased the margin requirements as part of their “deleveraging” efforts. The reasons behind these changes include the sharp decline and increased volatility in gold prices, stricter regulatory controls on leverage risks, and banks’ desire to reduce disputes and compliance costs. This means that the channels for ordinary investors to conduct leveraged gold transactions through banks are becoming narrower.
What Exactly is the “Bidding Transaction” Discontinued by ICBC?
Simply put, this was a service provided by banks to help individuals buy and sell gold and silver on the Shanghai Gold Exchange (SGE). The service offered two types of transactions:
- Full-payment for physical goods: For example, if you purchase Au99.99 (pure gold), you pay the full amount, and the bank buys it on your behalf at the SGE, after which you can collect the physical gold bars.
- Leveraged deferred transactions: Such as Au(T+D) and Ag(T+D), which allow you to trade with a small amount of capital for a larger potential profit. For instance, with 100 yuan, you could buy gold worth 1000 yuan (a leverage ratio of 10). If the gold price rises by 1%, you make a 10% profit; however, if it falls by 1%, you lose 10% as well, resulting in high risks.
ICBC has discontinued all bidding transactions, including both physical and leveraged ones, with a focus on the latter, which had the most disputes. After the discontinuation, customers who have already made purchases can only sell their positions (close them) and cannot open new ones, with a one-year grace period until July 2026 to handle their existing holdings.
Multiple Banks are Reducing Their Gold Services
Since the beginning of this year, at least seven banks have adjusted their services in two main ways:
1. Complete cessation:
- Postal Savings Bank of China stopped the service in February, requiring customers to close their positions by March; otherwise, forced closures would occur after that date.
- Guangfa Bank announced on June 22 that it would completely cease the service by the end of June, giving customers until June 25 to close their positions voluntarily, or else forced closings would take place by June 30.
2. Significant increase in margin requirements:
The margin is a deposit required during transactions; the higher the margin, the lower the leverage. For example:
- China Construction Bank and Agricultural Bank of China have increased the margin for Au(T+D) from 100% to 120%, effectively eliminating any leverage (you would need to pay more than the transaction amount as a deposit).
- Huaxia Bank has gone even further, raising the margin for Au(T+D) from 35% (leverage of about 2.8 times) to 120%, completely removing any leverage.
Three Core Reasons for Banks’ Collective “Deleveraging”
1. Sharp decline and high volatility in gold prices: International spot gold prices have fallen below $4,000 per ounce (a decrease of over $1,400 from previous highs). Investment banks have repeatedly lowered their target prices (for example, Goldman Sachs has reduced its target price for the end of 2026 by $500), making leveraged transactions more prone to margin calls and increasing the likelihood of investor losses.
2. Strict regulatory requirements: Leveraged precious metals transactions are considered high-risk derivatives that have frequently led to disputes between investors and banks. Regulatory authorities have been tightening restrictions on such services.
3. Banks’ desire to avoid liability: Leveraged businesses incur higher risk management costs and can easily result in legal issues. In contrast, banks prefer to offer lower-risk products, such as “accumulated gold” (where customers deposit a small amount each month to buy gold over time) or physical gold bars, which involve fewer disputes and less compliance pressure.
What Are the Implications for Ordinary Investors?
1. Those with existing positions should act quickly: ICBC has given a one-year grace period, while Postal Savings Bank of China and Guangfa Bank have provided shorter periods (from a few days to a month). If you do not close your positions in time, the bank may force them, and any losses will be borne by you.
2. Leveraged gold transactions are becoming more limited: In the future, it will be harder to conduct leveraged gold transactions through banks. You will need to turn to futures companies (open a futures account) or gold ETFs (although ETFs also carry volatility risks and do not offer leverage).
3. For stable gold investments, consider these options: If you prefer lower risk, buy physical gold bars, gold coins, or use the bank’s accumulated gold services. Although returns may be slower, the risks are lower, making them more suitable for long-term value preservation.
In summary, the banks’ collective adjustments are aimed at risk avoidance—both to prevent losses due to gold price fluctuations and to avoid regulatory penalties. For ordinary investors, the opportunities to profit quickly through leveraged gold transactions are becoming fewer, so it may be better to adopt a more conservative approach.