The beginning of this year has witnessed a remarkable surge in the price of spot gold, setting new historical records as it soared past the $2,940-per-ounce mark—a staggering increase of over 11%. This meteoric rise in gold prices has not gone unnoticed by investors, many of whom are eager to capitalize on these gainsHowever, some have resorted to dubious methods, such as using credit cards to buy gold in a bid to turn a profit, only to discover that this strategy comes with significant risks.

In this volatile environment, a new trend has emerged among certain groups who dub themselves “gold miners.” These individuals are active on social media, discussing a technique for cashing out through credit card purchases of goldThey advocate a method where users buy gold using their credit cards, then quickly sell it to precious metals recovery platforms for cash, touting it as a low or even cost-free way to “trade gold” and make substantial profits.

These gold mining groups gather prospective "miners" by posting on social media, subsequently leading interested parties into specific chat groups where they regularly share "gold-snatching" strategiesIn these groups, members typically find two types of participants: those who aim to make profits by quickly selling their purchased gold bars to reclaim their investment and earn cash, and those who act as intermediaries, transferring their gold purchases to the group leaders in exchange for a commission.

One group member from Jiangsu shared an intriguing perspective with our reporters, suggesting that by using certain banks' interest-free installment loans or redeeming points to offset interest charges when buying gold, investors can minimize their costsThe expenses involved would mainly revolve around the transaction fees for selling the gold.

For example, most credit cards come with at least a 30-day grace periodIf an investor buys gold when its price is relatively low (say 800 RMB per gram) and then sells it once it rises to 850 RMB per gram, they stand to benefit not only from the price difference but can also use the earned money to pay off their credit card bill, potentially leading to additional profits.

Various platforms and gold shops now allow customers to use credit cards from multiple banks to purchase gold

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For instance, Chowsang Sangmau supports installment payments via credit cards from major banks like China Construction Bank and Postal Savings Bank, and often offers discounts, such as a reduction of 220 RMB on purchases over 5,000 RMBSimilarly, the Jiangdong self-operated store of China Gold allows payments via credit cards from a range of banks.

Banks have also joined in on the action by initiating gold repurchase schemesFor example, the Agricultural Bank has recently published a gold repurchase strategy, reporting it has established close to 3,000 outlets nationwide for these transactionsInvestors noted that this has made the cashing out process much smoother. “Both gold brand stores and banks provide comprehensive buying and selling channels, making it easier to liquidate gold,” a member of the infernal group from Henan stated to our reporters.

However, despite the apparent allure of gold trading on credit, the underlying risks cannot be overstatedThe idea of purchasing gold on a credit card with the expectation of selling it later for a profit seems appealing; however, it is fraught with pitfalls that can lead to considerable losses.

A bank official expressed skepticism, stating that engaging in credit card gold trading is inherently risky, with investors often facing various fees beyond the price of the gold itselfWhen purchasing gold bars, buyers typically incur an additional fee of around 10 RMB per gram on top of the exchange rateWhen redeeming, they might receive 2-4 RMB less per gram than the market rateHence, the actual cost can amount to approximately 12-14 RMB in fees, making this a steep investment.

The volatility of gold prices poses further threatsFor instance, if someone buys gold and its price subsequently declines, they may find themselves in a position where they need to sell quickly at a loss due to the approaching credit card repayment deadline. “If the gold price falls and has not rebounded by the repayment date, investors may be forced to sell at a loss, leading to cashing out at unfavorable prices,” a representative from a commercial bank's credit card division warned

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