gold scams
Post on 16-May-2015
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Gold scams are 1. Fraud
2. Misrepresentation 3. Market manipulation
To know the typical gold scams is the first step to avert them
GOLD SCAMS: THREE TYPES
W W W. G O L D R AT E F O R TO D AY. O R G
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First, Fraud1. 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
GOLD SCAMS: THREE TYPES
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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
GOLD SCAMS: THREE TYPES
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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
GOLD SCAMS: THREE TYPES
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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)
GOLD SCAMS: THREE TYPES
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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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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?
GOLD SCAMS: THREE TYPES
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1. Do you think this incident is highly hypothetical, or would
only happen in dodgy countries?
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1. Well, this allegedly happened at the bank Morgan Stanley
2. In 2005 a class-action suit was filed against Morgan Stanley
GOLD SCAMS: THREE TYPES
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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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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
GOLD SCAMS: THREE TYPES
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Third, Market Manipulation
1. What is market manipulation?
2. These are actions that try to distort the market equilibrium
out.
GOLD SCAMS: THREE TYPES
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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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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
GOLD SCAMS: THREE TYPES
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