As the price of gold soared, Julie Li thought her investment in the precious metal was the smartest decision she had ever made. Across China, many like her have poured their savings into gold, lured by companies promising hefty returns far into the future.
About a year ago, Ms. Li invested about $35,000 in gold bars through Yongkun Gold, a company that runs an online platform and dozens of jewelry shops in eastern China. The investments performed so well that she used a credit card to put in $20,000 more.
Last month, Ms. Li and thousands of other Yongkun Gold investors were supposed to receive a payout from their accounts. Instead, the company halted all withdrawals and shuttered its shops. Its headquarters in the eastern Chinese city of Hangzhou closed, and the company stopped responding to calls and messages.
“That’s all my savings,” said Ms. Li, 28, who works as a customer service agent in China’s southwestern Sichuan Province. “The salesperson kept telling me that gold prices will keep rising.”
The enthusiasm of individual investors like Ms. Li has been a major factor in supercharging the price of gold, which has recently set a series of records. In the first three months of the year, Chinese investors bought roughly 124 metric tons of gold bars and coins, a 12 percent rise from the previous year and far more than investors in any other country, according to the World Gold Council.
The plight of Ms. Li and many other gold investors whose money may be lost is a worry for Chinese officials, who are sensitive to any potential source of social unrest. The local police have started a criminal investigation into the company.
Financial crime victims are often closely surveilled in China because many have resorted to public protests.
Dozens of investors, from several parts of China, planned to gather and protest with banners in front of the Hangzhou city government on Wednesday. They were met by groups of police officers as soon as they arrived, and at least one person was briefly detained, according to some people who were there. The rest were escorted to another building that accepts public petitions.
After they returned home, some investors received phone calls or visits from the police, who warned them against making further petitions.
Gold is often considered a safe investment during times of economic or geopolitical turmoil, and China’s slowing economy and trade war with the United States could be driving some of the demand.
The rapid rise in excitement for gold also reflects Chinese buyers’ faltering confidence in other investments. The property market has not recovered from a deep downturn, which led to the collapse of high-profile investment funds. Mainland stock markets have languished for years.
That has made gold an appealing alternative. The Chinese are “high-conviction buyers” who have “changed the dynamics of the global gold bullion market,” said Ross Norman, the chief executive of Metals Daily, an information and research firm.
Fueled by those convictions, Chinese investors have piled into gold funds, and an industry has flourished by hawking gold bars, coins and pebble-size beans.
Yongkun Gold Jewelry was founded in 2014 by Wang Guohai, a financial analyst who also sold gold and offered online investment services. Mr. Wang founded several asset management firms in the 2010s and earned honorary titles from government-backed institutions.
Investors took comfort in the company’s relatively long track record, its retail presence and the signs that it had a stamp of government approval. One of its subsidiaries, Yongkun Asset Management, had teamed up with the state-owned Industrial and Commercial Bank of China to sell gold-backed investments. Last year, Yongkun was praised by police for stopping scammers buying gold bars as part of a money-laundering operation.
Mr. Wang, Yongkun’s founder, was not reachable, and calls to the company were not answered.
Ms. Li, the investor from Sichuan Province, said she had started putting money into Yongkun, drawn to the steady rise in gold prices when China’s banks were offering meager interest rates for savings deposits.
Yongkun offered what seemed like a no-risk opportunity. Investors could order gold bars online and, after several weeks, either take delivery of them or sell them back to the company. They would pocket a profit if the price had risen, and if the price had fallen, Yongkun guaranteed to buy back the gold at the original purchase price, according to Ms. Li.
Customers who bought more than $400,000 worth of gold were promised an annual return of 9 percent.
Investors were given certificates attesting that the gold was stored in vaults at a branch of the state-owned Bank of China. However, when reached by phone, a representative for the bank branch, who gave only the surname Wang, said neither Yongkun Gold nor its affiliated companies had deposited gold there.
Fu Yindi, a college student from China’s northern Shandong Province, said her father, a construction worker, had invested the family’s life savings of more than $200,000, after a salesperson came to their home and guaranteed that the gold was being stored in bank vaults.
She said 700 other local residents, many of them retirees, had also invested with Yongkun shortly after the company opened a shop in their town, in the country’s largest gold-producing region.
“They believed the gold could keep its long-term value,” Ms. Fu said. “But now they can’t recover the money they saved.”
A former Yongkun employee, who asked not to be identified, said workers at the company had also invested in gold via the company’s funds, lured in part by lucrative bonuses for doing so.
Ms. Li said she was among the investors who traveled to Hangzhou last month to meet with the police and provide evidence. Yongkun investors have also used social media to claim that the company lost their life savings. The hashtag “yongkungold” has drawn about 30 million views on Douyin, China’s version of TikTok.
Several Yongkun investors who spoke out on social media said they had received calls from the police.
Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region.
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