Because of gold’s near unique qualities of high value, compactness, portability, and universal acceptance, it is targeted by scammers and fraudsters.
Who Should I Trust?
The answer is NOBODY. In our over 40 years experience, we have had cases where not only Sellers or Brokers, but also Customs Officials, Major Security & Transport companies, Airlines, Police Officials, Lawyers, Refineries and even Bankers were part of the scam sharing the profits from their victims.
While not necessarily a scam, many countries use the Water Density Method to provide a formal assay of gold bar melted at the mine in which the gold was mined. However, gold as an alloy will always contain other metals which can offset the whole density of the material being tested, based on the mass and density of the other material(s). Therefore, A GOLD will never accept an assay based on the Water Density Method or a XRF Analyzer (X-Ray Fluorescence, which measures the purity only on the surface of a bar) as the final assay result for payment. The only accepted assay for payment would be a Fire or Chemical Assay (where drillings from multiple points of a bar are melted and chemically tested for gold purity) done by our nominated and licensed Assayer in the U.A.E.
The Intermediary / Mandate
A fraudster will pretend to be acting as an Intermediary or Agent or Mandate for some important person, for whom discretion, confidentiality, and anonymity are essential, or for Mines or Traders of gold. The story concocted may be that a Foreign Embassy Official or member of the aristocracy needs to sell one or more 400 troy ounce gold bars or kilo bars. The Intermediary may ask the Buyer for a check to show his principal, to reassure the principal that the Buyer is OK, on the understanding that the check is not going to be presented or cashed. The con man then attempts to clear the check by special clearance. Some small-time crooks may settle for a small advance payment or loan towards their expenses.
To create an image of respectability, some fraudsters will instruct a solicitor (lawyer), accountant or other professional, to communicate with the intended victim. The professional may be an innocent party, but may also be in on a conspiracy to defraud. Recent tightening of financial regulations should make in more difficult to fraudsters to set up such schemes, but may work if the professional is negligent, or taken in by the deception.
Import Duty & Customs Fees
We have requests by Sellers asking us to pay shipping costs, import duties, VAT, to shipping agents. We suspect that if we did so, it would be for dummy goods, and the seller would be able to retrieve the payments from the agents before we had time to check the contents. This is a form of advance fee fraud.
These people will buy or sell or trade large amounts of gold with you, and usually blind you with jargon terms to make you feel stupid, and stop you asking too many questions.
Nigerian 419 Fraud Sani Abacha’s Widow / Son
In a variation of this endemic e-mail spam fraud, the son, widow, nephew of the ex President of Nigeria, or and ex minister, has a large quantity of gold bars or gold dust, and they have selected you randomly out of millions of people to sell for them on 20% commission, but you have to send them money up front. Also known as an advance fee fraud.
Overpayment & Refund
An apparent buyer may make a purchase, and accidentally overpay, often substantially, and ask for a refund of the balance. For example somebody buys 1 Krugerrand, and “accidentally” sends a check for 100 Krugerrands. The seller posts the coin together with a refund check for the difference. The buyer gets a special clearance on the check, then his own check bounces.
Stolen Bank Drafts
Fraudsters will arrange to buy gold, and offer payment by bank draft. It can be difficult to get a bank to check whether the draft is stolen, legitimate, or altered. Weekends are a prime time for this type of scam, as it gives the crooks a longer getaway period.
Altered Money Orders
We have had buyers try to use fraudulently altered money orders to buy gold. The fraudster will obtain a quantity of genuine money orders each for a low value, possibly £1, and expertly alter them to much higher amounts. See above comment about weekends.