With gold prices surging to a new high of $1,000 an ounce, speculation has also become rampant in the black market.

Hundreds of underground gold dealers, or "anjins" as they are called, are luring investors who are keen on punting in the yellow metal, but stumped by the high entry barriers set by the gold bourses.

Not surprisingly, these anjins promise high returns and low costs to anyone willing to invest a sizeable amount for trading.

What the punters really do not know is that they are actually parking their bets with illegal brokers who have no access to the gold exchange. The anjins are not brokers, rather they are more like the bankers in a casino with little capital or reserves, other than the deposits they take from clients, to cover losses.

According to Chen Xian, analyst, Shanghai Lingrui Gold Investment Ltd, all legal gold trading companies need to be members of the Shanghai Gold Exchange.

"Many of these illegal institutions claim they can trade gold in London or Hong Kong, but they have no ties with the London Metal Exchange (LME) or Hong Kong market. Instead, they open an account with their clients' money and do high-leverage betting on their own," said Wang Weidong, general manager with Shanghai Datong Gold Ltd, another Shanghai Gold Exchange member.

Currently, only Shanghai Gold Exchange members and futures companies under the aegis of China Securities Regulatory Commission (CSRC) are permitted to do gold-related investments, said analysts.

"Parking your money with the anjins can be prove dangerous as all they show is a phony trading record and vanish when you ask for money," said Wang.

Chen said these illegal gold brokers have disrupted the gold market and lured business away from certificated gold trading institutions.

Gold prices closed at $955 per ounce on Monday in London. By the end of June, more than 600,000 gold investment accounts were opened in China.

Gold serves as a stable investment tool to retain value during the global financial crisis. You cannot take gold trading as a high return speculative tool, and no company can promise high profits, said Lan Ke, an analyst with Southwest Securities.