How NOT to be a victim of gold scams

I have seen a lot of posts made by people who claim to be representatives of small gold mining operations, or a group of miners or mandates of someone selling gold. When I come across these posts I try to expose them for what they are, obvious attempts to scam people.

Sadly, gold fever causes people to set aside all reason, specially when the potential profits are in the millions of dollars. Brokers who are trying to operate large transactions on the dream that they will be worth millions often get caught up in these offers, and then propagate them themselves.

What I will attempt to do here is educate those who wish to buy gold and too often fall for these types of scams.

A few things first. In the precious metals industry, it is very difficult to make any profit, let alone any profit that comes anywhere close to millions or 100s of thousands or even 10s of thousands of dollars. It’s a very tough business, and most people who buy and sell don’t make it. It’s not a get-rich-quick business to be in. Even miners who hit the motherload spend sometimes millions and barely make a profit. It’s a rough, tough business with extremely small profit margins in which you have to work extremely hard to make any profit at all.

For example, Stillwater Mines, which operates in the United States and is the only large Platinum/Palladium mining effort in the US reported the 4th quarter of 2015 a 23 million dollar profit. And that is the only real mining operation of any size in the United States that mines Platinum Group metals. You are not going to make millions buying and selling gold when the actual mines are not making that much themselves.

First, I want to clarify the entire broker issue. Prior to starting my own refining company, I was involved in international trade. I owned a US based company in where I bought and sold different products and commodities. I made a decent living doing so, but it’s difficult. I came into contact with many brokers, who often were offering unbelievable deals on everything from cell phones and gaming systems, to oil and gold products. It’s sad, but many brokers will put in 16 hours a day just so they can be awake and working at the times other people halfway across the world are awake and doing business. I would say that 99% of the time these brokers are making very little if anything, yet they work hard and try so hard. For those who are trying to broker deals internationally, I have a lot of respect for your work ethic and networking skills but honestly you would probably be better off starting a company and buying/selling products yourself. If you are not doing this, you are most likely going to be spinning your wheels and never make a living at this.

Brokers are probably the most common victim, and the least noticed, of gold scams. Being offered a broker fee of sometimes as much as 5% of the sale elicits dreams of fast sports cars and a rich life. The fact is that anyone who is offering any commission on the sale of gold even 1% is most likely if not always not real.

In any of the countries where gold is mined, there are refineries which will pay many times up to 99% of London Fixed Pricing or Spot Prices, on assay against the gold percentage in the Dore’ they are brought. There is no reason for anyone to have any need to sell gold at any discount, let alone discounts like the offers seen on LinkedIn and other sites. Someone who has real, physical gold has no need to use brokers as they can readily sell the gold immediately to a reputable refinery anywhere in the world and make far more. So brokers, although I respect your work ethic, you are never going to broker any deal on gold because frankly, you are not needed. It would make no practical or business sense to use a broker to sell gold.

Many times, scam artists will use excuses for why they need a broker to sell their gold. It might be that they are not being treated fairly by refineries in their country, or it might be that they are afraid of being ripped off or treated unfairly or that someone is corrupt. These are just lies used to build confidence in why they need a mandate or representative to sell their gold. Anytime anyone uses the word mandate, it almost always with few exceptions means it’s not real. 10 years in the international trade business and never, not even once, did I ever conduct a transaction with a seller or buyer mandate, never. Not even when brokering a transaction. Large multi-million dollar companies have no need to use any brokers as they have those people already hired, they are called sales representatives.

One of the most famous scams and one that has been reported on many times is the story about Congo Born, Dikembe Mutombo, an all-star NBA defender, who was involved in a fake gold deal. Evidently, he and Houston based oil executive Kase Lawal were beguiled into believing that they could purchase around $30 million worth of the precious metal at a hugely discounted price compared to the spot price, from dealers in the African country of Kenya. You can read about it here:

Even intelligent people who are successful end up falling for these types of scams. Even worse, is conflict gold but that’s another story, and something I might post about at some later date. Point is, the scam artists who promote these scams are so good at what they do, they often are able to scam even people who are intelligent and successful.

So if you are offered an unbelievable price, it’s almost always with very few exceptions not real. And if it is real, it’s most likely conflict gold, or illegal in some way.

If the gold is being offered by a broker, or a seller’s mandate, it’s not real.

Often, these deals come with all kinds of convoluted requirements that make the transaction seem extremely difficult. These offers are also not real. There is no need for an FCO, that is a broker’s term meaning “Full Corporate Offer”. There is no need for POP another broker’s term meaning “Proof of Product” as the assay will prove the product, and nothing else. There is no need for an LOC or “Letter of Credit” as the gold is paid for upon assay by an electronic transfer. No need for blocked funds, no need for exotic financial instruments, no need for escrow or any of the other many different requirements these scams request.

Also, the buyer pays nothing until a proper assay is done but a reputable refinery in the presence of the buyer. Always, without exception, the buyer should be knowledgeable and present, or hire a someone who does know to represent their purchase. I have previously posted how to represent your material, the same holds true for buying gold. If you wish to know how to accomplish this without being ripped off, please refer to my previous post here:

Often, scam artists will show documents that seem real. They will produce any number of documents if asked. Sometimes they will even produce real documents that are fake that some disreputable government official has been bribed to produce for the scammers. Documents mean absolutely nothing if you are following the correct procedures in regards to purchasing gold. The only documents you need to concern yourself with are the assay documents that are produced at the time of assay, while you or your representative are present, from a reputable refinery or assayer that you and the seller both agree upon. You need to make sure that each step of the melt is properly witnessed, and that all the gold is melted and assayed.

A very common trick employed by scammers is to assay a very small amount which is real gold, and then to insist the rest of the gold doesn’t need to be assayed because it’s all the same. Or, if you are not present, to send you an assay that might be real, but not of the same material you will be sent. Without exception, ever, all the gold must be melted in the presence of the buyer, or the buyer’s representative and only at a refinery or assayer that both parties agree upon, and only a reputable refinery or assayer. After payment, the gold should never leave the buyer or buyer’s representative’s sight. If shipping, the buyer should arrange for proper shipping, with proper documents for shipping. Never, not ever, should the buyer allow the seller to arrange for shipping. The cargo could easily be swapped or stolen.

Personally, I would make sure the gold was sent to a refinery or assayer close to where you are doing business, in this way the concerns about shipping will be resolved and the sale can be transacted directly after assay, at the refinery without issue.

Logically thinking, there is no reason why a buyer should incur any costs prior to a proper assay. Scam artists will claim that they need money for shipping, or they need travel expenses. They will argue how it is not fair to ask them to ship the gold, yet they will also ask for money upfront to secure the transaction, many times up to 5%. If someone is selling gold, they have no need for the buyer to pay for shipping as they should have more than enough to do so themselves. And anything short of full payment is no guarantee at all. 5% doesn’t offer any security to the seller. If you are asked to pay any upfront fees, you can be assured it’s a scam. You should never pay for security, or vault storage, or shipping/travelling expenses. In short, you should never pay anything until after assay, and even then only for the percentage of gold present in the dore’ or dust or nuggets or whatever other form the gold may be in.

Scam artists will often send pictures along with their procedures. For someone who is not familiar with gold these pictures may look real. If you know what to look for however, you can easily tell that whatever is in the pictures is not really gold. I will show a few examples below.

In this example, the metal looks gold but the texture is wrong. This is of a harder metal such as brass, and painted to look like gold.

Gold is very soft, ductile, it tends to look soft specially when the purity is above 90%

You can see the softer more buttery look. You can also see what is called the "pipe", right down the center of the bar. Gold, when it is poured, is so heavy yet cools so fast that as it seeks the lowest point, and seeks to be to itself actually pulls together and forms a depression down the center of the bar. This is the Pipe. Here is a better example of a pipe.

These bars are all different colors, and the metal is very dimpled, rough. Too much so to be gold. Remember, gold has a soft texture. Gold also does not oxidize and show be the same color for each bar if poured during the same melt.

Same with the bars in this picture, all too rough, not a uniform color and the color is way off. Also in the picture, which you see a lot of, are pellets often called gold nuggets. Gold nuggets do not form perfect circles in nature, nor is gold poured or grained in this fashion. It makes absolutely no sense to pour gold in this way when it is far more labor intensive to do so. Most likely, and this is common, the metal in these pictures is spent brass, or the casing for bullets that have been fired, which there is a lot of in West African nations, unfortunately. The pellets are most likely casting grain made for casting brass, which is plentiful and cheap.

As I have time, I will post scam offers I see posted on Linked In and explain why the pictures are fake.

Any documents provided by a seller are absolutely meaningless and should be ignored. If proper procedures are being followed, there is no need for any documentation as the assay is proof of gold. Documents are easily forged and often as I stated before can be real documents obtained through illegal means. Ignore documents, gold speaks loud and clear for itself.

Never pay anything until an assay is performed. Do not travel to other countries with cash in hand to purchase gold in large quantities. Small quantities of ounces perhaps, but even then you must be very careful and meet at a refinery or government office. Many people have attempted to purchase gold in what are called "cash and carry" transactions and have been fortunate to have escaped with their lives. Many have not been even that fortunate and often will end up in the hospital, or dead. I cannot stress this enough, never think you can do a cash and carry type of transaction of any sizable amount, you will end up being ripped off or worse.

Remember, the very best scam artists will also seem like the most honest and legitimate people. They work very hard at seeming to be so and will come off as being knowledgeable and honest. If you follow the proper procedures, scam artists will go away. Stick to your guns, don't allow the seller to dictate procedures, after all you are the buyer, they should be catering to your needs. Scam artists prey on the greedy, or those willing to do things in the wrong way because they believe they can make a fortune on only one transaction.

As time allows, I will post more on this subject. If you have any questions, feel free to message me. I will be more than happy to answer whatever questions you might have. If I do not get back to you right away, I will as time allows.

"But his first example.... Is so false and misleading I actually laughed."

What is false in that statement for 2016?
That Stillwater Mines is the only large Platinum/Palladium mining operation in the US? That their 45th quarter 2015 profits were $23 million? That there is no way to make more money trading metals than the companies that mine and produce them?

This was written the year before Hannes Boone and Sibyane Company bought Stillwater in May 2017 then rebranding the company in August.

The company's history after the article was written is not relevant.

“Lead futures.”

not sure about that

In 1991, the EPA published a new rule to control lead and copper in drinking water systems across the country, called the Lead and Copper Rule (LCR). As part of a 2021 change to this rule, Citys are required to inventory water systems and report its findings to the EPA by October 2024.

Their profits had nothing to do with the acutal value of the firm.

many companies lose lots of money, or make minor profits one quarter and to state some mining companies one quarter profits as proof of anything at all is just stupid, let alone

“That there is no way to make more money trading metals than the companies that mine and produce them? “

I wish you the best my friend

Money is no good, buy gold. We have gold to sell you. We want money. Anyone that doesn’t know gold is a scam, deserves to be scammed.

The last place I worked had really good spam filters, but nothing is foolproof. One day I received a new version of the classic money in Nigerian bank scam. It happened to include gold in the enticement. I decided to have a little fun. I responded with something like this:

“In order to prove the authenticity of this communication, please send via FedEx $5,000 in gold bullion. Once the gold is tested for quality, we can continue our conversation.”

The fool actually responded with:

“I know understand you.”

I responded with:

“No kidding Dick Tracy.”

"Their profits had nothing to do with the actual value of the firm."

Stillwater's valuation was not the point Brown was making.

“I always found it odd that those who preach “protect your wealth by buying our gold cause you know, dollars are going to be worthless” are happy to trade gold for worthless dollars.”

indeed ... but goldbugs are pikers compared to the cryptobugs who insist that you should trade them your worthless dollars for their crypto thingies ... their universal mantra: “NEVER give back the dollars!”

“but goldbugs are pikers compared to the cryptobugs who insist that you should trade them your worthless dollars for their crypto thingies ... their universal mantra: “NEVER give back the dollars!”

Oh yeah! last place I would put my money!!

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