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Gold industry shaken as 83 tons of fake gold bars used to secure $2 billion loans in China

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Friday, 03 July, 2020, 16:25
Gold industry shaken as 83 tons of fake gold bars used to secure $2 billion loans in China

The gold industry has been shaken after it was discovered that 83 tons of fake gold bars have been used as collateral for loans worth 20 billion yuan from 14 financial institutions to a major gold jewelry manufacturer in Wuhan, China. This amount of gold “would be equivalent to 22% of China’s annual gold production and 4.2% of the state gold reserve as of 2019.”

One of China’s largest gold jewelry manufacturers, Kingold Jewelry Inc., has been using fake gold to secure loans obtained from 14 Chinese financial institutions, Caixin reported Monday. The loans were for 20 billion yuan ($2.8 billion) obtained over the past five years. The Wuhan-based jewelry company was able to pass on the fake gold as pure gold, using it as collateral for loans and insurance policies to cover any losses.