Beijing: – It is claimed that 83 tonnes of gold, amounting to 4% of gold in the Chinese reserves, is fake. Wuhan Kingold Jewellery Inc., a leading company in the gold market, having links with the Chinese military, had borrowed USD 2.8 billion against this fake gold. The gold deposited by this company as collateral with the financial institutions was found to be cooper bars with gold plating. Two websites, Kaishin from China and Zero Hedge from the United States, have posted information regarding the scam and it is claimed that there could be scams in some other Chinese companies too.
This new gold scam has been exposed in the same city of Wuhan, which is the origin of Coronavirus. Wuhan Kingold Jewellery Inc. has taken loans of USD 2.8 billion, over the last five years by mortgaging gold as collateral. A few months ago, one of the lenders, Dongguan Trust Bank, decided to liquidate the mortgaged gold for recovery of the outstanding loan. It was exposed at this time that the gold kept as collateral by Wuhan Kingold Jewellery Inc. is fake. The gold deposited by this company was found to be just cooper bars with gold plating.
All the financial institutions who had lent money to Wuhan Kingold Jewellery Inc. were woken up with a start. It is being said that the company had refused to give actual possession of the mortgaged gold to some of these lenders. Therefore, the question, whether the company was actually holding the gold mortgaged, is also being raised. The background of the company also has been a matter of consideration.
Wuhan Kingold Jewellery Inc. was formed by Jia Zhihong, an officer retired from the Chinese People’s Liberation Army, in 2002. Wuhan Kingold Jewellery Inc. is known as the biggest company in the gold market in the Hubei Province. The company is also listed on the prestigious Nasdaq index in the United States. Moreover, this company is included even in the Shanghai Gold Exchange independently started by China.
Some Chinese insurance companies had guaranteed the gold kept as mortgage by the Wuhan Kingold Jewellery Inc. The financial institutions had disbursed the funds against the certificates issued by these insurance companies. But now that the gold is found to be fake, a court case has been filed, with the insurance companies as co-accused.
This is the second major incidence in China of gold mortgaged with financial institutions turning out to be fake in the last five years. Before this, in 2016, fake gold matters had been exposed in the Shanxi and Hunan provinces in China. At that time, gold mortgaged with 15 financial institutions, worth about USD 2.5 billion was found to be impure. The gold bars confiscated at that time were found to contain Tungsten sheets.
The Wuhan Inc. incident raises a major question over the Chinese gold deposits and in turn, the Chinese economy on the whole. Reports have been published that the economic growth rate figures released by the Chinese authorities are inflated. Chinese analysts also have made sensational claims in this matter. Foreign experts have time and again doubted the Chinese gold reserves and the information published by the Chinese authorities regarding them. It has also been warned that the figures for loans released by the Chinese financial institutions are nothing but bubbles.
The fake gold incident only endorses these claims. Therefore, there are clear indications that the massive facade created by China, who claims to be an economic superpower, is actually hollow.
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