A savage rout in precious metals over late January and early February has prompted a wave of contrasting reactions from Chinese corporates and investors: some are hastily monetising holdings, others are using the dip to lever up. In Macau the Emperor Entertainment Hotel quietly removed dozens of gold floor bricks from its lobby and sold them on February 4 for HK$99.7m, booking an expected one-off gain of HK$90.2m. The company justified the sale as an opportunity to realise value and to cut recurring security and insurance costs associated with holding visible bullion in a redecorated space.
In mainland China industrial users have acted similarly. Oak Chemical (奥克股份) approved the sale of up to 10,000 kg of inventory silver held by a Jiangsu subsidiary and has already monetised nearly half of that via futures, helping the group turn what had been losses into a projected modest profit for 2025. The company says proceeds and related compensation will contribute roughly Rmb52m to results, and it will shift to leasing silver for production rather than owning large metal stocks.
Not all market participants are selling. Equities and leveraged funds have treated the metal sell‑off as a buying opportunity: trading desks show aggressive margin purchases of Hunan Gold as the gold price reversed from recent highs. Margin accounts increased their exposure to Hunan Gold in two sessions with net buys of Rmb956m and Rmb814m respectively, pushing the stock’s margin balance from Rmb1.2bn to Rmb2.97bn in short order.
The episode has also produced striking personal bets. Sun Kai, the board secretary of Xingye Silver‑Tin — the operator of one of Asia’s largest silver mines — bought Rmb2m of his company’s shares at the exchange limit‑down price on February 3, a purchase roughly equivalent to three years of his reported salary. The stock has since outperformed some peers, illustrating how insider purchases can both reflect confidence and feed momentum in a thin market.
Volatility remains elevated even after the initial flush. Since the Jan. 29 peak, spot London gold has suffered a maximal drawdown of about 21.4%, while spot silver has tumbled by over 41%. Market authorities and exchanges are already adjusting risk parameters: the Shanghai Gold Exchange reduced margins on its Ag(T+D) contract from 26% to 23% and tightened daily move limits from ±25% to ±22% in a bid to stabilise trading.
This correction has bled into other commodity markets and into mining equities, with multiple firms seeing consecutive limit‑down sessions and sectoral drawdowns exceeding 30% at times. The sell‑off began in internationally priced, finance‑centric commodities and has the potential to propagate to industrial metals and energy if macro or monetary conditions shift. For now the market is oscillating between opportunistic buyers — often using leverage — and sellers crystallising gains or cutting exposure to avoid operational headaches tied to holding physical metal.
The episode underlines a structural tension: bullion serves both as a store of value for miners and retailers and as liquid collateral for traders and financiers. When price momentum reverses violently, the incentives for miners and asset‑holders to monetise physical stockpile increase sharply, while leveraged funds and margin accounts can amplify both the fall and the rebound. Exchanges’ margin and limit adjustments have reduced immediate systemic stress, but they do not eliminate the risk of renewed volatility if global liquidity or policy signals change.