Singapore on alert for fake gold after scam hits Hong Kong shops
By Dhevarajan Devadas and Cheryl LimSINGAPORE, The Straits Times/Asia News Network -- Singapore jewelers and pawnshops are on the alert on news that their counterparts in Hong Kong were hammered by a gold scam where they unwittingly bought hundreds of ounces of fake bullion.
December 4, 2010, 9:35 pm TWN
The scam has been described by the Financial Times (FT) as “one of the most sophisticated scams to hit the Chinese territory's gold market in decades.”
The FT quoted Haywood Cheung, president of the Chinese Gold & Silver Exchange Society, Hong Kong's gold exchange, saying that jewelers and pawnshops in the city had discovered at least 200 ounces of fake gold worth about US$280,000 so far this year.
In Singapore, Ho Nai Chuen, president of the Singapore Jewelers Association, told The Straits Times it was considering issuing a directive to its members to warn them to be vigilant.
However, he was confident that industry players in Singapore had adequate measures in place to detect fakes.
One of the checks in Singapore is that local goldsmiths are required by law to record sellers' identity cards or passports. These records are routinely checked by the authorities.
Ivan Ho, president of the Singapore Pawnbrokers' Association, noted that there are sophisticated chemical tests to detect fakes. These are used if members' suspicions were aroused.
A minute portion of the gold will be taken and tested. “It's highly unlikely that such cases (as in Hong Kong) will occur here,” Ho said.
He understands that his members have come across “one or two” foreign syndicates trying to peddle fake jewelry in recent months. However, these scams do not seem to be a serious issue.
The owner of Arthesdam Jewelry, Francis Woo, noted that “in this business, one is sure to get cheated, but so far we have only encountered small scams.”
He said that these mostly involved copper coins, coated on the outside with gold and passed off as the real thing. He added that his business mostly bought gold from trusted suppliers.
Still, with gold prices having risen to new records this year and now hovering around US$1,400 an ounce, there is every incentive to try and profit from the precious metal.
The FT reported that even Luk Fook Group, one of Hong Kong's largest jewelers, had fallen prey to the deception, paying US$11,500 for fake gold. Its executive director Paul Law was quoted as saying, “This was the biggest hit ever.”
The Hong Kong scam saw fakes with a pure gold coating that masked a complex alloy with similar properties to gold, suggesting that the fakes were produced with sophisticated equipment and an extensive knowledge of metallurgical engineering.
The FT quoted Chinese Gold & Silver Exchange Society's Cheung as saying that fake gold could be making its way through the city's retail market.
But Hong Kong industry insiders stressed that the scam targeted the sale of scrap gold to jewelers and that the gold bar market, which has stricter controls, had not experienced any problems.