Gold Scams

Three Types

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GOLD SCAMS: THREE TYPES

Gold scams are

1. Fraud
2. Misrepresentation
3. Market manipulation

To know the typical gold scams is the first

step to avert them

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GOLD SCAMS: THREE TYPES

First, Fraud
1. Buying scrap gold (old jewellery) for
only half or less of the gold price can be
considered as fraud

2. Typically Businessmen having this in

mind announce their scrap gold sale in
local radio stations and rent a hotel
lobby on a Saturday morning for this
purpose

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GOLD SCAMS: THREE TYPES

1. Another way of fraud is selling gold

numismatic coins at prices which highly
surpass the material and collector’s
value

2. The victims are often old people who

can easily be tricked into this business
deal

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GOLD SCAMS: THREE TYPES

1. From time to time Nigeria Emails arrive

in the inbox

2. Here, a businessman with connections to

Nigerian gold mine tries to sell gold by
the kilo for prices that are far lower than
the current gold rate

3. Of course, this was a legal business and

gold export licenses did exist

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GOLD SCAMS: THREE TYPES

1. The only catch, for the transaction it is

necessary to fly to Nigeria

2. (It is up to the email recipient to decide

whether this is a genuine business
opportunity)

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GOLD SCAMS: THREE TYPES

Second, Misrepresentation

1. Imagine, a bank sells gold which the

buyer never physically receives, but
which is stored in the bank’s vault

2. The bank further charges the gold owner

storage fees

3. So fine so good
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GOLD SCAMS: THREE TYPES

1. Let’s now assume the owner of the

precious metal insists on seeing the gold

2. Now it is discovered that the bank never

actually possessed the gold

3. How would one call the bank asking for

storage fees of something that was never
stored?

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GOLD SCAMS: THREE TYPES

1. Do you think this incident is highly

hypothetical, or would only happen in
dodgy countries?

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GOLD SCAMS: THREE TYPES

1. Well, this allegedly happened at the

bank Morgan Stanley

2. In 2005 a class-action suit was filed

against Morgan Stanley

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GOLD SCAMS: THREE TYPES

1. The bank was accused of selling

between 1986 and 2005 physical gold
and other precious metal to clients who
paid fees for storage at this bank

2. But allegedly Morgan Stanley either

made no or a different investment on
behalf of its clients

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GOLD SCAMS: THREE TYPES

1. The result was that Morgan Stanley

would pay US$ 4.4m to settle this class
action suit

2. "While we deny the allegations, we

settled the case to avoid the cost and
distraction of continued litigation,"
Morgan Stanley said in a statement

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GOLD SCAMS: THREE TYPES

Third, Market Manipulation

1. What is market manipulation?

2. These are actions that try to distort the

market equilibrium out.

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GOLD SCAMS: THREE TYPES

1. For example, in the beginning of 2007

there was an incident regarding naked
short-selling among stocks of smaller
mining companies

2. Here, shares were massively sold to

force the price of the shares down

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GOLD SCAMS: THREE TYPES

1. Also, governments could be labelled as

market manipulators if the restrict the
free trade of gold

2. Vietnam is such as case

3. In the beginning of 2011 it was reported

that the government had plans to ban the
trade of gold bars on the free market

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