The fluctuations in gold prices in the market have always captured people’s hearts. There are many ways to invest in gold. In addition to buying physical gold, we also have gold futures, paper gold, etc. So when investing in gold The risk of a run on gold is very likely to occur in China.
What does a run on gold mean?
A gold run is when people rush to take out the gold stored in institutions, but the physical gold reserves of institutions are not enough, which will cause chaos due to insufficient physical gold inventories.
Not only will there be a run on gold, but our currency will also be at risk of a run. If a bank's credit is shaken or there is a risk of bankruptcy, bank depositors will rush to the bank to cash in and withdraw their deposits.
A large part of the reason why most banks currently suspend paper gold business is because of excessive fluctuations in gold prices. However, physical gold cannot be extracted from paper gold, so there will be no gold run. However, it is difficult for us to define whether this type of paper product is a financial product or a future? Is it a product or a service? The boundaries are still very blurry, and we need to think carefully if we want to invest.