Posted on 06/29/2020 10:07:55 AM PDT by SeekAndFind
More than a dozen Chinese financial institutions, mainly trust companies, loaned 20 billion yuan ($2.8 billion) over the past five years to Wuhan Kingold Jewelry Inc. with pure gold as collateral and insurance policies to cover any losses.
Kingold is the largest privately owned gold processor in central China's Hubei province. Its shares are listed on the Nasdaq stock exchange in New York. The company is led by Chairman Jia Zhihong, an intimidating ex-military man who is the controlling shareholder.
What could go wrong?
Well, plenty, as at least some of 83 tons of gold bars used as collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan of loans outstanding against the bogus bars. The loans were covered by 30 billion yuan of property insurance policies issued by state insurer PICC Property and Casualty Co. Ltd. (PICC P&C) and other smaller insurers.
The fake gold came to light in February when Dongguan Trust Co. Ltd. set out to liquidate Kingold collateral to cover defaulted debts. In late 2019 Kingold failed to repay investors in several trust products. Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.
The news sent shock waves through Kingold's creditors. China Minsheng Trust Co. Ltd., one of Kingold's largest creditors, obtained a court order to test collateral before Kingold's debts came due. On May 22, the test result returned saying the bars sealed in Minsheng Trust's coffers are also copper alloy.
Authorities are investigating how this happened. Kingold chief Jia flatly denies that anything is wrong with the collateral his company put up.
The case holds echoes of China's largest gold-loan fraud case, unfolding since 2016 in the northwest Shaanxi province and neighboring Hunan.
(Excerpt) Read more at asia.nikkei.com ...
All that is about to change with the discovery of what may be one of the biggest gold counterfeiting scandal in recent history. And yes, not only does it involve China, but it emerges from a city that has become synonymous for all that is scandalous about China: Wuhan itself.
FROM ZERO HEDGE:
Some more background: Kingold - whose name was probably stolen from Kinross Gold, one of the world’s largest gold miners - is the largest privately owned gold processor in central China’s Hubei province. Its shares are listed on the Nasdaq stock exchange in New York (although its current market cap of just $10MM is a far cry from its all time highs hit when the company IPOed on the Nasdaq around 2010) . The company is led by Chairman Jia Zhihong, an intimidating ex-military man who is the controlling shareholder.
What could go wrong?
Well, apparently everything as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan of loans outstanding against the bogus bars. And as Caixin adds, the loans were covered by 30 billion yuan of property insurance policies issued by state insurer PICC Property and Casualty and various other smaller insurers.
The fake gold came to light in February when Dongguan Trust (one of those infamous Chinese shadow banks) set out to liquidate Kingold collateral to cover defaulted debts. As the report continues, in late 2019 Kingold failed to repay investors in several trust products. To its shock, Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.
Copper? Not even tungsten? Gold is more that twice as dense as copper so detection would require the advanced scientific tool of picking it up in your hand.
Communism and complete top-down political central planning encourages cronyism and fakery in everything.
China is the world leader in fakery.
I suspect Jia will be shot.
Who knew the Chinese cheat?
RE: Who knew the Chinese cheat?
If Chinese companies can cheat each other, why will they not hesitate on foreigners?
bttt
83 tons of gold. Is that a lot?
RE: 83 tons of gold. Is that a lot?
Based on the current gold price of $1,796/ounce.
So, a ton is 1,000 KG, and one KG is 35.2739619 ounces, which means that one ton is equal to 35273.9619 ounces. Now it’s easy to calculate the price of one ton of gold, which is: 35273.9619 x $1,796 = $63,352,035.57 (In case you’re wondering, Venezuela owns just over $23 billion worth of gold).
So, according to this moment’s price, a ton of gold is worth just over $63 million dollars.
Multiply $63 million/ton by 83 tons and you get the total worth of this counterfeit ( about $5.2 Billion ).
I don't think they're stupid . . . but maybe Communism makes you crazy.
To put that in terms of one of my engineering professors, its more than 82 but less than 84...
Your math is a little off. Gold and other precious metals are weighed and priced in troy ounces (heavier than a “normal” ounce as there are 12 troy ounces to a pound as opposed the the regular 16 ounces to a pound). So there are 32.1507 troy ounces to a kilogram.
Wuhan. Why does that sound familiar?
Oopsie. I'm sure there's a reasonable explanation for all this. Getting bamboozled by lying crooks, that's actually one pretty reasonable explanation...
It sounds like the guys at Kingold got both the money from the loans AND the real gold they used as collateral. Better than the sting in “The Sting”.
Nice work there, guys!
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