gold scams

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Post on 16-May-2015




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A gold scam is either 1. downright fraud, 2. misrepresentation or 3. market manipulation. To be knowledgeable about gold scams is necessary to anticipate and avoid them ...


  • 1. Gold Scams
    Three Types

2. Gold Scams: Three Types
Gold scams are
Market manipulation
To know the typical gold scams is the first step to avert them
3. Gold Scams: Three Types
First, Fraud
Buying scrap gold (old jewellery) for only half or less of the gold price can be considered as fraud
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
4. Gold Scams: Three Types
Another way of fraud is selling gold numismatic coins at prices which highly surpass the material and collectors value
The victims are often old people who can easily be tricked into this business deal
5. Gold Scams: Three Types
From time to time Nigeria Emails arrive in the inbox
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
Of course, this was a legal business and gold export licenses did exist
6. Gold Scams: Three Types
The only catch, for the transaction it is necessary to fly to Nigeria
(It is up to the email recipient to decide whether this is a genuine business opportunity)
7. Gold Scams: Three Types
Second, Misrepresentation
Imagine, a bank sells gold which the buyer never physically receives, but which is stored in the banks vault
The bank further charges the gold owner storage fees
So fine so good
8. Gold Scams: Three Types
Lets now assume the owner of the precious metal insists on seeing the gold
Now it is discovered that the bank never actually possessed the gold
How would one call the bank asking for storage fees of something that was never stored?
9. Gold Scams: Three Types
Do you think this incident is highly hypothetical, or would only happen in dodgy countries?
10. Gold Scams: Three Types
Well, this allegedly happened at the bank Morgan Stanley
In 2005 a class-action suit was filed against Morgan Stanley
11. Gold Scams: Three Types
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
But allegedly Morgan Stanley either made no or a different investment on behalf of its clients
12. Gold Scams: Three Types
The result was that Morgan Stanley would pay US$ 4.4m to settle this class action suit
"While we deny the allegations, we settled the case to avoid the cost and distraction of continued litigation," Morgan Stanley said in a statement
13. Gold Scams: Three Types
Third, Market Manipulation
What is market manipulation?
These are actions that try to distort the market equilibrium out.
14. Gold Scams: Three Types
For example, in the beginning of 2007 there was an incident regarding naked short-selling among stocks of smaller mining companies
Here, shares were massively sold to force the price of the shares down
15. Gold Scams: Three Types
Also, governments could be labelled as market manipulators if the restrict the free trade of gold
Vietnam is such as case
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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