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83 tons of counterfeit gold bars backing $ three billion in loans in China: this man claims to know the reality

The gold industry was shaken when it was discovered that 83 tons of counterfeit gold bars were being used to cover loans worth 20 billion yuan in China. While the Chinese authorities haven't said whether the real gold exists or where it is, an insider claims they know what happened.

The secret behind the Chinese scandal involving 83 tons of counterfeit gold bars

One of the largest Chinese gold jewelry manufacturers, Kingold Jewelry Inc., was embroiled in a major counterfeit gold scandal earlier this year. The company used 83 tons of gold bars to secure loans from 14 Chinese financial institutions valued at 20 billion yuan ($ 3 billion). This amount of gold would correspond to about 22% of China's annual gold production. However, the media reported in July that the gold bars turned out to be counterfeit and were made only of gold-plated copper alloy, but the company and its executives denied any wrongdoing.

Kingold Jewelry is a Nasdaq listed company headquartered in Wuhan, China. The stock price fell 88% since the scandal rose to $ 0.1334 on Wednesday. The company announced its plan to voluntarily part with Nasdaq in August.

83 tons of counterfeit gold bars backing $ 3 billion in loans in China: this man claims to know the truthKingold Jewelry Inc. (KGJI) pricing table. Source: Nasdaq

While Chinese authorities have not revealed where the real gold is or if it even exists, one man claims to know what happened, NTD reported last week. Yizhi Wei told the publication that the real gold bars were exchanged for fake ones and smuggled from China to Hong Kong, where they were sold below market prices. He claimed to be one of the middlemen.

In the publication, Wei was described as "a member of the so-called red aristocracy of China … from the Manchu ethnic minority". Also, "his father was a high-ranking communist official" and "his grandfather was a communist revolutionary who helped the regime take power".

Wei said, “It came from the Chinese city of Shenzhen every day. We'd buy it every day, 10 kilos, 20 kilos, 30 kilos. Then we will sell it in the afternoon on the same day. We made money with the price differences. We didn't know where the gold came from. "

He became certain that the gold bars he bought and sold were the same as Kingold Jewelry's, as the numbers printed on them matched the range of numbers supposedly printed on the Kingold Jewelry gold bars.

Wei added that almost all organized crime groups and triads in Hong Kong were involved in gold panning. They were responsible for contacting buyers and shipping the gold. He noted that any gold buyers they found were large foreign investors, not Chinese. "This is because there is a problem when a person in China buys gold in bulk and therefore looks for overseas buyers from the US, Europe and Japan," he told the news agency.

In addition, he believes the people investigated by Chinese authorities for the fake gold scandal are only scapegoats as the scale of the operation "is not what one or two people can do," and notes that the amount that he has dealt with is just the tip of the iceberg. "

The gold bars were found to be counterfeit in February, but the media and Chinese regulators remained silent about it until June, the publication said. Wei said: “To this day nobody knows where the gold is. So I want to say that the Chinese system is rotten from its roots. "

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Photo credit: Shutterstock, Pixabay, Wiki Commons

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