The gold industry was shaken when it was discovered that 83 tons of fake gold bars were used to support Chinese loans worth 20 billion yuan. Although the Chinese authorities have not disclosed whether or where real gold exists, some insiders claim to know what happened.

The mystery behind the Chinese scandal involving 83 tons of fake gold bars

One of China’s largest gold jewelry manufacturers, Kingold Jewelry Inc., was caught in a major fake gold scandal earlier this year. The company used 83 tons of gold bars as collateral and obtained loans worth 20 billion yuan ($3 billion) from 14 Chinese financial institutions. The amount of gold is equivalent to 22% of China’s annual gold production. However, the media reported in July that the gold bars turned out to be fake, just gold-plated copper alloy, but the company and its executives denied any wrongdoing.

Kingold Jewelry is a NASDAQ-listed company headquartered in Wuhan, China. Since the scandal surfaced on Wednesday to $0.1334, its stock price has plummeted 88%. The company announced its plan to voluntarily delist from Nasdaq in August.

83 tons of fake gold bars in China backed a $3 billion loan: this person claims to know the truth
The price chart of Kingold Jewelry Inc. (KGJI).Source: Nasdaq

NTD reported last week that although the Chinese authorities have not revealed the existence or even the existence of real gold, one person claimed to know what happened. Wei Yizhi told the publication that real gold bars were exchanged for fake gold bars, then smuggled out of China into Hong Kong, and then sold at a price lower than the market price. He claims to be one of the middlemen.

The publication called Wei “a member of China’s so-called red nobility from Manchu.” In addition, “his father was a senior official of the Communist Party” and “his grandfather was a communist who helped the regime seize power.”

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Wei said: “I will come from Shenzhen, China every day. We will buy it every day, 10 kg, 20 kg, 30 kg. Then we will sell it in the afternoon. We profit from the price difference. We don’t know. Where does the gold come from.”

He determined that the gold bars he bought and sold were the same as the gold bars belonging to Kingold Jewelry, because the numbers printed on it corresponded to the number range assumed to be printed on the gold bars of Kingold Jewelry.

Wei added that almost all organized criminal groups and triads in Hong Kong have participated in money laundering activities. They are responsible for contacting buyers and shipping gold. He pointed out that all the gold buyers they found were large foreign investors, not foreign investors in China. He explained to the news media: “This is because there is a problem with one person buying a large amount of gold in China, so they are looking for foreign buyers from the United States, Europe and Japan.”

In addition, he believes that the people investigated by the Chinese authorities for the fake gold scandal are just scapegoats because the scale of the operation “cannot be done by one or two people”, and pointed out that the amount involved in the case “is just the tip of the iceberg.”

The publication pointed out that the gold bars were found to be fake in February, but until June, the media and Chinese regulators remained silent about this. Wei said: “Until today, no one knows where the gold is. That’s why I want to say that the Chinese system has rotted from its roots.”

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