Ha! So Chinese are as bent as the "Crimex" (oops - Comex)

[5huggy]

Mystery of $2bn of loans backed by fake gold in China

Nasdaq-listed Kingold's play for trove of property stymied by corruption probe

 

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. Regulators found adulterated gold bars in 19 lenders' coffers backing 19 billion yuan of loans. In one case, a lender seeking to melt gold collateral found black tungsten plate in the middle of the bars.

In the case of Kingold, the company said it took out loans against gold to supplement its cash holdings, support business operations and expand gold reserves, according to public records.

In 2018, the company beat a number of competitors bidding to buy a controlling stake in state-owned auto parts maker Tri-Ring Group. Kingold offered 7 billion yuan in cash for 99.97% of Tri-Ring. The Hubei government cited the deal as a model of so-called mixed-ownership reform, which seeks to invite private shareholders into state-owned enterprises. But Kingold has faced problems taking over Tri-Ring's assets amid a series of corruption probes and disputes involving Tri-Ring.

After obtaining the test results, Minsheng Trust executive said the company asked Jia whether the company fabricated the gold bars.

"He flatly denied it and said it was because some of the gold the company acquired in early days had low purity," the executive said.

In a telephone interview with Caixin in early June, Jia denied that the gold pledged by his company was faked.

"How could it be fake if insurance companies agreed to cover it?" he said and refused to comment further.

As of early June, Minsheng Trust, Dongguan Trust and a smaller creditor Chang'An Trust filed lawsuits against Kingold and demanded that PICC P&C cover their losses. PICC P&C declined to comment to Caixin on the matter but said the case is in judicial procedure.

rest of article here - - >> https://asia.nikkei.com/Spotlight/Caixin/Mystery-of-2bn-of-loans-backed-by-fake-gold-in-China

[HerefordBullyun]

That will give Trump more ammo to delist the Chinese companies on the NASDAQ 

[5huggy]

1 hour ago, HerefordBullyun said:

That will give Trump more ammo to delist the Chinese companies on the NASDAQ 

Yeah! cos he wants the "CRIMEX" to be best of ALL "crooks" - gunna make America Great! 👍😉🤣🤣🤣🤣🤣

No OFFENCE intended to our american members !😉👍👍

[dicker]

Dangerous to do in China with the death penalty for things like this.............

[Prophecy]

And to think some people believe that China is going to introduce a gold backed currency to replace the Dollar that everyone's going to trust. Haha. nice one. Anyway, this is an execution level **** up.

[Goldmansacks]

"If you don't hold it"........

[dicker]

As has been said so many times on the forum (and elsewhere) how on earth do you *really* trust that an organisation / government has the gold that is supposed to back a currency.

I am not a conspiracy theorist *at all* but can see how tempting it might be for a government to issue currency that is supposed to be backed by gold but is not fully.  There are so many ways in which this might happen: Cockup, conspiracy, getting caught short in the market when printing currency, taking delivery of fake bars etc etc

Similarly when organisations get into trouble how tempting would it be to use the gold held for clients as collateral, sell it off etc.

At the end of the day, why would a government need to offer a gold backed currency in paper form when the physical form is....well perfect! (Yes I know for FX, bank transfers etc)

Interesting one to watch

Take care

Dicker

[Prophecy]

2 minutes ago, dicker said:

As has been said so many times on the forum (and elsewhere) how on earth do you *really* trust that an organisation / government has the gold that is supposed to back a currency.

I am not a conspiracy theorist *at all* but can see how tempting it might be for a government to issue currency that is supposed to be backed by gold but is not fully.  There are so many ways in which this might happen: Cockup, conspiracy, getting caught short in the market when printing currency, taking delivery of fake bars etc etc

Similarly when organisations get into trouble how tempting would it be to use the gold held for clients as collateral, sell it off etc.

At the end of the day, why would a government need to offer a gold backed currency in paper form when the physical form is....well perfect! (Yes I know for FX, bank transfers etc)

Interesting one to watch

Take care

Dicker

TBH gold as a physical currency isn't perfect at all in a practical sense.

[dicker]

I think you are right but I don't have a solution about how to trust an institution!

Take care

Dicker

[SilverApe]

An interesting read.

https://www.zerohedge.com/markets/83-tons-fake-gold-bars-gold-market-rocked-massive-china-counterfeiting-scandal

[dicker]

Fascinating article. Thanks for this.  
 

Best

Dicker

[5huggy]

The amount of "Tungsten" they appear to use - I think i might invest in TUNGSTEN next! 😉  🤣🤣🤣🤣🤣🤣🤣🤣🤣

[Melon]

On 29/06/2020 at 16:10, Prophecy said:

TBH gold as a physical currency isn't perfect at all in a practical sense.

Gold backed currency could work though right? Unlikely to ever happen though. 

[Prophecy]

16 minutes ago, Melon said:

Gold backed currency could work though right? Unlikely to ever happen though. 

Was responding to Dicker's comment about him not trusting a government to have the gold a currency is backed in so he preferred physical gold as the best form of money for everyone to use for all transactions.