Counterfeit Gold?

One of China’s largest gold jewellery manufacturers, Wuhan-based and NASDAQ-listed Kingold Jewelry, is being accused of depositing fake gold bars as collateral to obtain loans.

They borrowed from 14 Chinese financial institutions such as China Minsheng Trust, Hengfeng Bank, Dongguan Trust and Bank of Zhangjiakou.

According to reports from Beijing, the 83 tonnes of gold were purportedly valued at $2.6 billion. Apparently, many of these bars are gilded copper.

Two New York law firms have already begun investigations into securities fraud.

The story broke after a Beijing-based website investigated complaints and then published a story that read, “The mystery of [US]$2 billion of loans backed by fake gold”.

Kingold is denying it lodged fake bars but when Kingold defaulted on loans to Dongguan Trust, the gold bars pledged as collateral and turned out to be gilded copper alloy.

Minsheng Trust’s “gold” bars have also turned out to be copper alloy under the gilded surface. Much of the money borrowed was reportedly used to invest in China’s housing bubble, some of which obviously went sour.

With some of the money borrowed, Kingold bought a company called Tri-Ring that owned blocks of land in Wuhan and Shenzhen.

The story is more complicated than it seems.

Kingold’s controlling shareholder is Jia Zhihong.

Zhihong served in the military in Wuhan and Guangzhou. He once managed gold mines for the People’s Liberation Army. People are claiming people like Jia Zhihong can do what they want.

Questions are already being raised as to whether more of China’s “hard assets” of gold simply do not exist.

This is not the first scandal of its kind. In 2016, “gold” bars were issued as collateral to 19 lenders in the Shaanxi province that turned out to be adulterated – in that case, the core of the bars consisted of tungsten.

This is why you have to go with a proven and tested dealer when it comes to precious metals. Noble Gold has proven to be a solid source of precious metals and we have continued to deliver metals even through this pandemic.

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