One of China’s largest gold jewelry manufacturers, Nasdaq-listed Kingold Jewelry Inc., has been embroiled in a massive fake gold scandal since early 2020. The company used 83 tons of gold bars to secure loans worth 20 billion yuan ($3 billion) from 14 Chinese financial institutions – an amount equivalent to about 22% of China’s annual gold production. In July, media reports revealed that the bars were actually gilded copper alloy. Kingold and its executives denied any wrongdoing, but the stock price plunged 88% to $0.1334, leading the company to announce a voluntary delisting from Nasdaq.
Authorities Silent on Real Gold’s Whereabouts
Despite the scandal’s magnitude, Chinese authorities have not disclosed whether the real gold ever existed or where it is. The media and regulators kept the discovery quiet for months after the fake gold was found in February, only breaking the story in June. This silence has fueled speculation and conspiracy theories.
An Insider Comes Forward
Last week, Yizhi Wei told NTD television that he knows the truth. Wei described himself as a member of China’s so-called “red aristocracy” from the Manchu ethnic minority, with a father who was a senior communist official and a grandfather who was a revolutionary. He claimed to have acted as a middleman in a scheme that swapped real gold bars for fakes and smuggled the genuine gold out of mainland China.
Wei detailed a daily routine: “Every day it would come in from the Chinese city of Shenzhen. We would go buy it every day, 10 kilos, 20 kilos, 30 kilos. Then we will sell it in the afternoon on the same day. We made money from the price differences. We didn’t know where the gold came from.” However, he became certain the bars were Kingold’s because the serial numbers printed on them fell within the range registered to the company.
Hong Kong Triads and Foreign Buyers
According to Wei, nearly all organized crime groups and triads in Hong Kong were involved in laundering the gold. They handled logistics and buyer contacts. Crucially, all buyers were large foreign investors from the U.S., Europe, and Japan, not Chinese entities. Wei explained that buying large quantities of gold within China would raise red flags, so the operation targeted foreign markets where transactions could be more discreet.
Wei strongly believes the individuals currently under investigation are scapegoats. “The scale of this operation is not something one or two people can do,” he said, adding that the amount he personally handled was only “the tip of the iceberg.” He concluded with a scathing critique: “Till this day, nobody knows where the gold is. That’s why I want to say that the Chinese system is rotten from its roots.”
While the claims have not been independently verified, the story adds a new layer to one of the most extraordinary gold fraud cases in modern history. It raises serious questions about oversight in China’s financial system and the integrity of collateral used in billion-dollar loans.