The People's Bank of China said on Thursday that "underground gold futures speculation" was "typical illegal trading on gold futures" and was not protected by law.
The central bank warned Chinese investors of the extremely high risks in illegal futures trading.
Illegal gold futures trading is reported to have cost Chinese investors at least 100 billion yuan (14.6 billion U.S. dollars).
The illegal gold futures trading operates in two main ways: local companies working as agents for domestic institutions and individuals to help them invest in overseas gold futures; companies providing services in gold trading and demanding investors deposit money in designated accounts in a variant of margin trading.
The central bank said Chinese investors could conduct real gold trading through domestic commercial banks, or invest in gold futures through the Shanghai Gold Futures Exchange.
The central bank said it would improve supervision of gold trading and enhance education among investors to raise awareness of the risks.
(Xinhua News Agency October 23, 2008)
