China's only pure silver fund has closed its Class C shares to new investors after a violent price surge pushed its market value more than 60% above its underlying assets. The UBS SDIC Silver Futures Fund LOF will stop accepting new subscriptions for Class C shares starting Monday, December 29, 2025, following repeated risk warnings that failed to slow social media-driven demand.
The fund manager, UBS SDIC Fund Management Co., described the gains as "unsustainable" and warned investors face sharp downside risks. The fund had gained 187% this year, compared to about 145% for Shanghai-listed silver futures, creating a massive premium that reached 62% by Wednesday, December 24—up from just 7% at the start of December.
This move comes as China faces an intense year-end rush into precious metals, with silver, gold, and platinum all approaching record levels. Retail traders, with limited local investment options, have poured money into listed open-ended funds (LOFs). Social media platforms like Xiaohongshu (Rednote) circulated guides showing how to exploit price gaps between the fund's exchange-traded units and its over-the-counter shares.
Regulatory measures escalated throughout the week. On Thursday, December 25, the fund manager cut the maximum Class C subscription from 500 yuan to 100 yuan (roughly $14.26). The fund then fell by its 10% daily limit. Even after this drop, the premium remained elevated at 44%. On Friday, December 26, the manager announced the full closure of Class C subscriptions and also lowered the cap on Class A shares to 100 yuan.
Simultaneously, China's Guangzhou Futures Exchange (GFEX) imposed new trading limits on platinum and palladium contracts, effective December 29. The exchange will cap daily openings at 300 lots for non-futures firms on specific platinum (PT2606, PT2608, PT2610, PT2612) and palladium (PD2606, PD2608, PD2610, PD2612) contracts.
Global precious metals have seen extraordinary gains in 2025. Silver prices have jumped about 150% on global markets, with Shanghai silver hitting a record $80 per ounce. Spot silver reached $72.70 on Wednesday, putting it on track for its best annual performance since 1979. Gold has surged 60% year-to-date, while platinum is up about 145% and palladium has gained more than 85%.
The silver market's structural vulnerabilities amplify the risk. The market is far smaller than gold's—silver held in London is valued at under $50 billion, compared to about $1.2 trillion for gold. No central bank backstop exists for silver, unlike gold where around $700 billion is held by central banks and can be lent during stress. Industrial demand, tight inventories, and limited liquidity create a volatile mix now centered on China's retail trading frenzy.
