China's 2020 fake Gold Bullion bar scandal...

[ARTICLE]: 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 from 14 Chinese financial institutions.

The 83 tonnes of gold were purportedly valued at 20.6 billion yuan (A$4.2 billion) but many of them have turned out to be gilded copper, according to reports from Beijing.

Two New York law firms have already begun investigations into securities fraud on behalf of investors in Kingold Jewelry Inc (NASDAQ: KGJI).

The story broke after a Beijing-based website investigated complaints and then posted the news under the headline: “The mystery of [US]$2 billion of loans backed by fake gold”.

Kingold is denying it lodged fake bars with Chinese lenders such as China Minsheng Trust, Hengfeng Bank, Dongguan Trust and Bank of Zhangjiakou. The trust companies involved are largely what are known as “shadow banks”.

Fake gold used as collateral after loan defaults
The alleged scam came to light earlier this year when Kingold defaulted on loans to Dongguan Trust. The gold bars pledged as collateral turned out to be gilded copper alloy. Minsheng Trust’s “gold” bars have also turned out to be copper alloy under the gilded surface.

Kingold Jewelry secured loans from over a dozen firms.
Much of the money borrowed was reportedly used to invest in China’s housing bubble, some of which investments obviously went sour.

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

Military backing helped Kingold raise money
Kingold’s controlling shareholder is Jia Zhihong, described as “an intimidating ex-military man”.

Mr Jia, who has served in the military in Wuhan and Guangzhou, once managed gold mines for the People’s Liberation Army. Kingold was originally a gold factory in Wuhan affiliated with the People’s Bank of China.

Commentaries on this breaking story argue that Mr Jia’s connections with China’s powerful army meant he could do anything he wanted, no questions asked.

In fact, a state-owned insurer covered some of the loans — but with the beneficiary being Kingold, not the lenders.

Wuhan Kingold is the largest gold processor in Hubei province.

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 issued as collateral to 19 lenders in the Shaanxi province also turned out to be adulterated – in that case, the core of the bars consisted of tungsten.

Fears are that other Chinese gold producers and jewellery makers may also be involved in similar frauds.

It is reported that the Shanghai Gold Exchange has cancelled Kingold’s membership.

Shares in Kingold fell 23.77% overnight on the news to US$0.85.

https://smallcaps.com.au/china-counterfeit-gold-scandal-wuhan-kingold-jewelry-fake-bars-loans/?fbclid=IwAR3cfYcs2ZS9lEduB4o2G38DbujrVseuPLid_vC-fPVVIB0eu54oCaGIJkU

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I read today that China's gold bar counterfeits were said to affect as much as 4% of their Bullion Stocks but that the real figure is likely to be as high as 40%

Am not sure how they get away with it when fake gold ingots are so easily detected with ultra sound depth measuring instruments.
I have my own tester and it has no difficulty in Identifying heavy gold plated silver coins as not solid gold and it even tells me that the base metal is likely silver.
Maybe for as long as they can get away with it the dealers in these large bullion sales don't care whether the ingots are fake..
A bit like when you find a counterfeit 50 dollar note. Most people will try to pass it off asap as genuine and plead ignorance if it is discovered.

The first few layers of ingots may have been pure gold and tested,probably lazy protocols,inside job.
Professionals who knew who & what they were dealing with.


cheers  moredeep

If the ingots were plated copper or copper alloy then the weight would be a bit off for the size of the ingot doncha think and would be easily spotted.
    If you us tungsten as an in filler for the gold ingot then that would seem to be a waste of tungsten. It is not easy to turn tungsten into a metal bar/ingot. It is quite a process.
    Tungsten has military significance and China is hungry for tungsten

Tungsten is not refined by smelting or in a manner similar to many other metals due to the fact that it has the highest melting point of any metal. Tungsten is, therefore, extracted chemically from the crushed ore in a series of chemical reactions, titrations, washings, and filterings. It is common that a partially refined chemical such as ammonium paratungstate (APT) will be sold and shipped for further processing, rather than shipment of raw ore itself. The company which purchases the APT will then continue the process of chemical refining. The end result of the refining process is high purity tungsten powder. Two parameters, particle size, and particle size distribution are controlled to create powder which is suitable for the company’s purpose. Tungsten is sometimes used in powder form, but very often it must be consolidated into a solid form.

To consolidate tungsten powder it may be blended with a binder and very small amounts of other materials that will provide desired properties to the finished product. The most common method of consolidation is sintering. Tungsten powder is pressed into cakes or fragile bars which are heated in a furnace until the particles adhere to one another. The bar is then placed in a sintering bottle for further heating. Electric current is run through the bars until they become extremely hot, and the individual tungsten grains merge together and form a solid part. During this process, the bar shrinks and becomes more dense.

The bar is not yet fully dense and lacks other desirable properties such as ductility and high tensile strength that will be gained as the material is drawn or rolled into the final form. The exact process that the tungsten undergoes at this point depends greatly on the final form and use but usually involves drawing through dies, or rolling through a mill, with annealing at various points. During the process the tungsten is further compacted, becoming more dense, and the crystal structure of the tungsten is manipulated in order to improve physical properties.

Hey Adrain,
What brand of gold tester do you have and where did you get it?
Cheers,
WB

very simple age old method density= weight/volume to get the volume use the Archimedes method Put the object into a known volume of water then measure the increase in the level. Then weigh the object The density of pure gold is 19.3 g/mL

Usually those dud gold ingots are arranged to be of close sg to pure gold.
The plated or encased fake inner base metal has a boundary between the gold and the base metal and this can be detected with ultrasonic depth/thickness metal testers.

Wallaby Bob wrote:Hey Adrain,
What brand of gold tester do you have and where did you get it?
Cheers,
WB

It is an ultrasonic depth /thickness tester and can differentiate between various metals to a roughish degree.
Have not used mine for a while but when I find it I will let you know.