Kingold Jewelry (KGJI) Sees Life as CEO Issues Letter to Shareholders; Refutes Short-Seller Allegations

Kingold Jewelry, Inc. (Nasdaq: KGJI), has issued the following letter to shareholders refuting recent allegations.

The letter was sent by CEO Zhihong Jia.

Dear Shareholders,

I am fully aware of the short seller attacks in reports by Pete Long, titled "Kingold Jewelry: Kingold or Fools Gold?" parts I and II. These reports, published by a fictitious figure, have made incorrect and libelous statements, including totally fabricated and false allegations, against Kingold.

I would like to state unequivocally that Kingold has consistently filed accurate, complete and timely information with the Securities and Exchange Commission (SEC), and that we reaffirm the accuracy of all our public filings.

I have until now been reluctant to formally respond to the absurd allegations in the above-mentioned reports as I did not feel that reports with such little substance, where the writer was not even willing to disclose his identity, and which contained such ridiculous and inaccurate accusations, merited a response. However, I have been repeatedly called upon by investors to respond and now feel the need to address the most egregious of these claims. I have ignored claims regarding matters that are not under our control.

1. Pete Long report I claims that Kingold's (KGJI) financial results, which were reported in an audit by Wuhan Tianli Partners Accounts ("Tianli"), differ radically from our reported numbers. Tianli has never been Kingold's auditor in the PRC, or anywhere else, nor have they ever had access to our books or records.
   
   
2. The idea that Tianli performed an audit of Kingold without the Company's knowledge and without visiting or contacting me or the Company is impossible and absurd.
   
   
3. Kingold's SAIC filings are publicly available from the SAIC and copies are available for review at our offices in Wuhan or New York. They are entirely and completely consistent with the financial statement and filings made with the SEC, which Kingold prepared, and which was subject to an audit by Friedman LLP.
   
   
4. Kingold's SAT tax filings are completely consistent with our SAIC record, and are reviewed quarterly by our auditor.
   
   
5. Kingold's revenues can easily be validated through the amount of gold products we sell, which directly ties to our gold purchase records with the Shanghai Gold Exchange, through whom we purchase 100% of our raw materials. Copies of all such purchase records are available for review at our offices in Wuhan or New York.

It appears that "naked" short sellers have attempted to manipulate our common stock price. Pete Long and the fund he works for disclose in the disclaimer that they are short Kingold's stock. They seek to profit from the stock price declining as a result of their grossly misleading statements and / or fabricated information concerning Kingold.

I would like to take this opportunity to highlight our strong financial position and to reaffirm 2011 guidance.

Specifically, as of Q2/2011, Kingold had shareholders' equity of approximately $108 million and more than $5.5 million in cash and cash equivalents, with no debt and less than $1 million in accounts receivable. I also herein reaffirm our previously announced financial guidance of $800M-$850 million in revenues and $32-34 million in net income for the calendar year 2011.

This is set to be a great year for Kingold and I am very proud of the tremendous efforts and hard work of our very talented management team and employees.

I look forward to meeting any interested parties and investors either in Wuhan or when I next visit the U.S.

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