In a development causing a stir in the gold sector, Chinese banks are pulling the plug on retail paper gold trading.
Major Chinese banks including the Industrial and Commercial Bank of China (ICBC)–the world’s largest by assets–have announced they will cease offering retail paper trading products linked to the Shanghai Gold Exchange (SGE) after settlement on July 24, 2026. Postal Savings Bank of China, Ping An Bank, China Guangfa Bank, and China Construction Bank are also taking similar actions.
The banks have advised retail clients to close their positions, liquidate their holdings, sell, or take physical delivery before the deadline. After which, access via mobile banking, online platforms and branches will be restricted.
At first, the news had sparked concerns China was shutting down the SGE or completely banning gold ownership for its citizens. However, these rumours are unfounded.
“Do not mistake this for China cooling on gold. What is being switched off is the speculative paper layer. This move reflects a distinction between leveraged paper trading and physical ownership,” Joshua Rotbart, founder of global precious metals bullion firm J. Rotbart & Co., told the Investing News Network (INN) in an email.
In fact, physical gold purchases, gold accumulation plans (GAPs) and gold exchange-traded funds (ETFs), and the institutional side of the SGE are unaffected. The gold reserve strategy of the People’s Bank of China (PBOC) remains in play as well.
Let’s examine the banks’ motives and what market analysts predict this means for the global gold market.
Why this matters: A shift toward physical reality
China has long been one of the world’s largest physical gold buyers, whether it be strong consumer demand for gold bars and jewelry or the PBOC building up its gold reserves.
Unlike the paper-heavy Western exchanges, the SGE is known as the world’s largest purely physical spot gold exchange. Its trading system is centered around the actual withdrawal and delivery of physical bullion.
By curbing leveraged retail paper trading amid recent gold price volatility, Chinese financial authorities seem keen on risk management and reducing speculative excesses that could disrupt the financial system. Readers are well aware of the run-up to a record high price for gold above US$5,500 in January and the subsequent sharp pullback to the US$4,000 level.
“Chinese banks have grown increasingly cautious about leveraged retail products following periods of heightened volatility and earlier losses borne by retail investors,” said Rotbart, whose precious metals company operates consulting and sales offices in four key cities including Hong Kong and Singapore, and facilitates secure physical bullion storage across 16 international locations.
“When gold prices move sharply, leveraged paper products expose both the investor and the institution to greater risk. Discontinuing these products reduces operational and reputational risk while supporting broader financial stability.”
He shared that his own company has experienced an uptick in the margin calls they’ve asked their clients to attend to. “The recent volatility in the price of gold enhanced some of the risks involved in margin trading and gold based finance,” he added.
What does this closure of access to the paper markets mean for China’s gold market?
“Investors should view this primarily as a regulatory and risk-management decision rather than a bearish signal for gold. It reinforces the importance of understanding the difference between leveraged financial products and physically allocated metal,” state Rotbart.
“Over time, this development may encourage greater emphasis on physical ownership rather than short-term leveraged speculation. It channels demand toward the metal itself rather than reducing it.”
This move could spur demand for the physical metal if those investors forced to close their paper positions opt for physical delivery or shift to other bullion-based investments like ETFs or GAPs.
Beyond risk mitigation and toward a broader monetary shift
Some market analysts see the banks’ actions as part of China’s broader strategy to challenge Western-dominated pricing in the gold market. They view this as aligning with de-dollarization and central bank gold buying trends.
Nations are quickly accumulating bullion as trust in fiat systems erodes amid rising global debt. Over the past four years, the World Gold Council (WGC) estimates that central bank gold accumulation has averaged 1,000 metric tons annually. That figure is double the average annual purchases over the preceding decade.
According to the WGC’s Central Bank Gold Reserves survey, released in June, 45 percent of the record 76 reserve manager respondents expect their institution’s gold reserves to increase over the next 12 months.
Jay Martin, CEO of VRIC Media, who believes the true price of gold is being supressed by Western paper markets, argues that in a market where paper claims frequently outnumber physical ounces, the current actions of China’s banks could potentially strain available supply and lead to another run on gold prices.
In the July 18, 2026, episode of The Jay Martin Show titled “July 24: The Day China Reveals Gold’s Real Price,” Martin drew historical parallels to underscore the importance of Chinese banks stopping the retail paper trade for gold. He referenced the 1968 London Gold Pool crisis, where excessive selling by central banks to defend a $35 per ounce peg led to a floor literally collapsing under piles of gold bars as demand soared.
Speaking about China’s banks halting the retail paper trade, Martin noted that “[t]he official explanation is that this protects ordinary people from gold’s wild price swings. That explanation is convenient, but I don’t believe it. I think that July 24th is the day that China starts finding out what gold is actually worth.”
He emphasized that paper gold allows multiple claims on the same ounce, inflating supply and depressing prices: “If there are 10 paper claims for every real ounce of gold, the market sees 10 times more gold than actually exists.”
Removing the paper markets from the equation, says Martin, will allow China to discover the real price of gold.
Matthew Piepenburg, partner at Von Greyerz, shared similar sentiments in his July 14 INN interview.
“I’ve written ad nauseam for years about the COMEX and the LBMA markets, and how they legalize price manipulation and fraud legally, and China isn’t stupid. They’ve been watching this since 1973 . . .They know that we use massive amounts of leverage to force the boot to the neck of gold and silver, so we don’t have natural price discovery,” Piepenburg said.
“Fast forward to 2026, China is saying for us to have more credibility, more trust, and more natural price discovery, we are now going to try and make the paper trade, which is an open secret that it’s a lie, we’re going to call the bluff on that. We’re going to go focus more on physical supply and demand.”
He cautioned that this doesn’t mean that the market will immediately see the gold price triple, but rather that this is another move in the direction toward true price discovery.
“What Shanghai and Hong Kong and China in the East are doing is anchoring the trade in something more valuable, actual supply and demand, less nonsense, less dishonesty, and that gives them more credibility,” Piepenburg added.
Listen to the full interview to hear more from Piepenburg about the underlying drivers in the gold and silver markets.
Implications for global gold markets and investors
China is not banning gold ownership; it is incentivizing its citizens to buy physical gold rather than participate in the paper markets.
In doing so, could it be accelerating a global re-pricing of the physical metal?
Precious metals expert Joshua Rotbart takes a more subdued evaluation of the developments in China’s gold market.
“I would not read too much into this. I would not expect this decision to affect the gold industry. That said, if the policy gradually shifts investors from paper products toward physical ownership, it could provide a modest long-term support for physical demand,” said Rotbart.
“For long-term investors seeking wealth preservation and portfolio diversification, physical gold continues to serve a fundamentally different purpose from speculative trading instruments. If you hold physical gold, this validates the position you already own.”
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
