Silver fund hits limit down for five consecutive days, change in valuation method criticized

Chinese Influencer Silver Futures Fund Hits Limit Down for Five Consecutive Days; Change in Valuation Method Criticized for Unfair Practice

The global precious metals market has experienced intense volatility, with China’s most well-known silver futures fund hitting the limit down for five consecutive days. The global precious metals market has experienced intense volatility, with China’s most well-known silver futures fund hitting the limit down for five consecutive days.
According to Cailian Press, Guotou Ruixin Silver Futures Securities Investment Fund (LOF) resumed trading on Friday (February 6) and hit the limit down again, currently trading at 3.099 yuan (RMB, 0.57 SGD), with the premium rate falling back to 28.73%. As of now, Guotou Silver LOF has been limit down for the fifth consecutive day. Before the limit down, the fund manager announced that to protect investors, trading was paused for one hour and resumed at 10:30 a.m. on Friday. Due to the decline in global silver prices, the fund’s valuation was affected, hitting the 10% limit down for four consecutive trading days.

This fund, listed in Shenzhen, is the only silver futures fund in China’s public offering market. It once surged due to last year’s silver price rally and market enthusiasm, attracting many investors to chase high prices, earning it the nickname “Internet celebrity fund” in the industry. However, since the beginning of this year, the prices of precious metals like gold and silver have fluctuated sharply, leading to a decline in the fund’s value. Investors believe that after the market closed on Monday (February 2), Guotou Ruixin adjusted the fund’s valuation method, deciding no longer to value based on domestic closing prices but instead referencing the London silver spot price in the international market, which was the reason for the further plunge.

The fund manager explained that because international silver prices have fallen sharply under extreme market conditions, far exceeding the price changes in the domestic market (the Shanghai Futures Exchange’s silver futures can only fall a maximum of 17% per day), continuing to use domestic settlement prices could lead to an artificially inflated net asset value, failing to accurately reflect the underlying asset’s true value.

However, changing the valuation method means investors will face greater losses during declines. On February 2, Guotou Silver’s net asset value plummeted by 31.5%, setting a record in the public fund industry. Previously, valuing based on domestic prices limited the decline to a maximum of 17% due to the daily limit mechanism, but switching to international market prices caused the actual decline to be concentrated and released all at once, resulting in a single-day net value drop of over 30%.

The announcement sparked opposition from investors, with many posting complaints on platforms like Ant Fortune, Tiantian Fund, and Xiaohongshu, directly accusing the fund company of “changing rules arbitrarily” and “unfair practice.”