In a significant move that has sent ripples through the gold market, major Chinese banks have announced they will cease offering retail paper trading products linked to the Shanghai Gold Exchange (SGE) after settlement on July 24, 2026.
The Industrial and Commercial Bank of China (ICBC) the world’s largest bank by assets, is among the institutions taking this step, along with the Postal Savings Bank of ChinaPing An BankChina Guangfa Bank and China Construction Bank. This decision has led to speculation about China’s stance on gold and the potential consequences for the global market.
Understanding the shift from paper to physical gold
The initial reaction to this news was one of concern, with some fearing that China was shutting down the SGE or banning gold ownership for its citizens. However, these fears are unfounded. Joshua Rotbart founder of global precious metals bullion firm J. Rotbart & Co. clarified that “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.”
Physical gold purchases, gold accumulation plans (GAPs), gold exchange-traded funds (ETFs), and the institutional side of the SGE remain unaffected. Additionally, the People’s Bank of China (PBOC) continues to build its gold reserves as part of its reserve strategy.
China has long been a major player in the physical gold market, with strong consumer demand for gold bars and jewelry, as well as the PBOC’s efforts to build up its gold reserves. The SGE is known as the world’s largest purely physical spot gold exchange, with a trading system centered around the actual withdrawal and delivery of physical bullion.
Risk management and reducing speculative excesses
The decision to curb leveraged retail paper trading comes amid recent gold price volatility. In January, gold prices reached a record high above US$5,500 followed by a sharp pullback to the US$4,000 level in June. This volatility has led Chinese financial authorities to focus on risk management and reducing speculative excesses that could disrupt the financial system.
Rotbart explained that “Chinese banks have grown increasingly cautious about leveraged retail products following periods of heightened volatility and earlier losses borne by retail investors.” He noted that his own company has experienced an uptick in margin calls due to the recent volatility in gold prices, enhancing the risks involved in margin trading and gold-based finance.
The closure of access to the paper markets is seen by some as part of China’s broader strategy to challenge Western-dominated pricing in the gold market. This move aligns with de-dollarization and central bank gold buying trends, as nations accumulate bullion amid rising global debt and eroding trust in fiat systems.
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. This shift could potentially accelerate a global re-pricing of the physical metal.
Precious metals expert Joshua Rotbart takes a more subdued view of the developments in China’s gold market. He stated, “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.”
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.
The World Gold Council (WGC) estimates that central bank gold accumulation has averaged 1,000 metric tons annually over the past four years, 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 believes that the true price of gold is being suppressed by Western paper markets. He 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 “the 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 interview. He cautioned that this does not mean 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.
