October 20, 2010

Rising Gold Prices and the Rise in Gold Scams

Gold - A Brief Overview

Gold (element symbol Au) means ‘shining dawn’ in Latin and carries the atomic number of 79. The shiny metal holds value in coins, jewelry and artifacts, and has been a symbol of wealth and power since the beginning of recorded history. It's been a store of value for more than 5000 years. Historical accounts of ancient Egypt say that gold was abundant than dirt. Millenium later, governments used gold for buying power and commerce, known as the gold standard, where paper money or instruments represented a store of gold reserves. The gold standard came to an end in 1971, and in 1975 the price of gold was finally allowed to fluctuate in the free market.

Is Gold Running Out?

About 180,000 metric tons of gold have been unearthed in history, which is a little more than the amount needed to fill two Olympic-size swimming pools. More than half of that gold has been mined during the last 50 years. The world's largest deposits are being depleted, and new large gold discoveries are rare. Extracting gold is most cost efficient in large, easily mined deposits. Since 1880, South Africa has been the source of most of the world's gold supply. About 50% of all gold ever produced has come from South Africa. In 2007, China overtook South Africa as the world's largest gold producer. Searching for gold is now a family affair involving small mines in developing countries, where women and children are often employed in hazardous labor at minimal pay. Motivated by rising prices, corporations and individuals are searching for gold the worldwide.

Gold: A Bu Bu Bubble?

Holders of gold commonly store it in the form of bullion coins or bars, or through investment vehicles like ETFs (Exchange Traded Funds), futures contracts or mining company shares . Investing in or owning gold is used most commonly as a hedge against inflation, political or other economic uncertainty. The current economy is no exception. The continued collapse of the U.S. dollar and the failing of the United States economy under the mulatto Muslim President, Barack Hussein Obama, sent many investors to flock to gold as a possible safe haven.

The investment firm Goldman Sachs put a $1,650 price target on gold for 2011. As of Oct 7, 2010, gold futures contracts reached an all-time high of $1,364.77 (unadjusted for inflation). Like the recent internet and real estate bubble, some claim that gold is starting to show signs of a speculative bubble. With jewelry accounting for two-thirds of the demand for gold worldwide, some analysts say there is no fundamental support for the rally.

The Boom in Gold Scams

Advance fee fraud, romance scams, investment scams and other criminal operations related to gold are increasingly common. Such scams can range from a business claiming to be a gold bar, gold dust or gold coin supplier to an individual involved in the shipping, investment or sale of gold. Gold scams are common in West Africa but no country is immune. Scams can take place in any country. Investing or buying gold via the internet is especially suspectible to fraud and scams. Gold coins, bars and dust can all be manipulated in quality, or even fake.

Ghana: Mother of Gold Scams

Gold investments in West Africa are booming, and the relative political stability in Ghana, West Africa has made the country one of the most attractive new mining investments in Africa. Ghana is Africa’s second-largest gold producer after South Africa. Large international players like Newmont Mining Corp and AngloGoldAshanti have been joined by smaller players like Randgold Resources, Keegan Resources, and others. Industry observers see potential for more deposits in Ghana, and consider the country as still under-explored. New gold finds here fast become the acquisition target of large corporations.

Scam and criminal operations are growing at least as fast as the gold boom. More criminals and scammers mean the risk for getting in on the action in West Africa is very high. Gold scams can involve real government agencies and documentation. Criminals and fraudsters can speak the industry lingo and even provide detailed contracts, shipment details and photos of operations and facilities. Ghana gold scammers are quickly becoming experts.

Minimizing the Risk & Investing Safely

Deals involving gold purchase, shipment or gold investment via the internet is especially prone to fraud and scams. For cases involving West Africa, a Ghana private investigator, due diligence or Ghana background check service should be used to verify representatives and business operations. For reliable and professional services, there is U.S.-based Wymoo® International which has global operations and field investigators in Accra, Ghana. Another option is Oak House Company which is a small private investigation firm in Accra. Investigators conducting due diligence or background checks for gold should have contacts Ghana government agencies like the Ministry of Lands and National Resources, eological Survey Department of Ghana, and the Precious Minerals Marketing Corporation (PMMC).

Many false companies are now registering with government agencies, making the verification process even more complex. Because of all the gold scams that can take place, conducting international due diligence or a background check is key. To be safe, all international gold deals and transactions should be verified by a professional investigation company.

All the Best,

S. Birch
© 2010 S. Birch

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