Key Topics Overview

• Impact of the new tax policy on Shuibei gold prices.
• Sudden gold price surge in Shenzhen's Shuibei market.
• How the new law affects various players in the gold industry.
• Future outlook for gold prices in light of the tax changes.

Shuibei Gold Price Surge: A Detailed Look

On a Monday afternoon, the Shenzhen Shuibei market, the largest gold and jewelry distribution center in China, experienced a significant surge in gold prices. The gold price jumped from around 930 RMB/gram to 992 RMB/gram in just a matter of hours.

China's Ministry of Finance and the State Administration of Taxation announced a new gold tax policy (hereinafter referred to as the 'New Policy'), effective from November 1, 2025, and lasting until December 31, 2027. The New Policy specifies a value-added tax (VAT) exemption for member units or clients selling standard gold through the Shanghai Gold Exchange and the Shanghai Futures Exchange before the end of 2027.

Analysis of the New Tax Policy

The New Policy clarifies that no VAT is levied on the exchange if physical delivery does not occur. However, if physical delivery does occur, the corresponding tax policy will be applied according to the announcement.

Specifically, for member units purchasing standard gold for investment purposes, the exchange implements immediate VAT refunds, with concurrent exemptions from urban construction maintenance tax and education surcharges. Special VAT invoices will be issued to the purchasing member units based on the actual transaction price. For non-investment purposes, VAT will be exempt, and ordinary invoices will be issued to the purchasing member units based on the actual transaction price. When clients purchase standard gold, the exchange exempts VAT, and issues ordinary invoices to the purchasing clients based on the actual transaction price.

According to Gu Fengda, chief analyst at Guosen Futures, the most significant change compared to previous policies is the establishment of a new classified management mode based on 'usage' as an anchor point.

Implications of the Policy on the Gold Industry

Gu Fengda believes that distinguishing between 'investment' and 'non-investment' uses will structurally impact various entities. It's a clear positive development for gold-using enterprises, reducing tax burdens. For traders, those focused on the physical industry chain will gain a better environment, while patterns relying on investment gold 'ticket chains' will be difficult to sustain. They must shift towards improving real service capabilities. For individual investors, the policy is a strong guidance to encourage them to invest through standardized financial products such as accumulated gold and gold ETFs through the Shanghai Gold Exchange and the Shanghai Futures Exchange. This aligns with the trend of modern financial investment and is more convenient and secure.

Market Reactions and Banking Adjustments

Investors have reacted quickly to the policy, and banks have made corresponding adjustments. It is reported that ICBC's gold bars are out of stock today, and the acceptance of opening accounts for Yi Cun Ju gold savings, active savings, new regular savings plans, and physical delivery applications has been suspended from now on. CCB has suspended the acceptance of instant purchases of Yi Cun Gold, new regular investment purchases, physical gold exchange, and suspended the exchange of physical precious metals for personal gold savings, and the exchange of physical precious metals for account gold, etc.

Impacts on Gold Prices

Gu Fengda judges that short-term impacts may lead to structural differentiation, but it will not change the core trend driven by the global macroeconomy in the long run. The retail price of investment gold bars may moderately increase due to tax chain adjustments and cost pass-through. However, the price of consumer gold, such as jewelry, will be more stable due to the clear reduction in tax burdens.

Shuibei Market Dynamics and Tax Considerations

The fluctuation of gold prices in Shenzhen Shuibei directly reflects market supply and demand changes and costs. The surge in gold prices in Shuibei is essentially a result of the superposition of higher costs in non-exchange channels and the prior realization of market expectations under the New Policy. The specific associated paths are as follows:

1. The tax burden costs in off-exchange transactions have become explicit, directly driving up wholesale prices. Before the implementation of the New Policy, the Shuibei market formed a price advantage of about 100-200 RMB/gram lower than branded gold stores, based on 'non-standardized transactions + tax ambiguous areas'. The New Policy clearly stipulates that non-exchange channels must pay full 13% VAT, which is directly passed on to transaction links. In order to maintain profit margins, merchants are forced to raise selling prices, forming direct upward price pressure.
2. Channel migration expectations have triggered a short-term hoarding wave, exacerbating the supply-demand imbalance. The New Policy forces transactions to concentrate on compliant exchange channels, and most merchants in Shuibei are small and medium-sized operators who find it difficult to directly connect to exchange resources and cannot enjoy on-site tax benefits. In order to avoid higher tax costs later, many merchants increased their inventories before the implementation of the New Policy, leading to a short-term surge in market demand. At the same time, some downstream brand merchants are worried about future increases in purchase costs, so they also locked in sources in advance, further exacerbating the supply and demand tightness in the Shuibei market, driving up prices.
3. Compliance costs are superimposed, increasing upward price pressure. In addition to VAT costs, the New Policy has strengthened regulatory requirements for non-exchange channels, including transaction record retention and anti-money laundering compliance obligations for reporting large transactions. The annual cost of a single monitoring system is 80,000-120,000 RMB. Small and medium-sized merchants need to include compliance costs in pricing, further increasing terminal wholesale prices. This double superposition of 'tax burden costs + compliance costs' has significantly weakened the original price advantage in the Shuibei market, and price increases have become an inevitable choice.
4. Amplification effect of market expectations. Since the beginning of this year, gold prices have risen steadily, with the spot gold in London rising by more than 52% this year, and the domestic spot gold rising by nearly 50% simultaneously, and there is a strong expectation of rising prices in the market itself. The implementation of the New Policy further strengthened the expectation of 'increased costs + channel shrinkage'. Some merchants took the opportunity to adjust prices, and consumers' 'buy when the price rises and don't buy when the price falls' psychology also increased short-term transaction enthusiasm, forming a positive cycle of price increases.