Who wouldn’t want to buy gold at a below-the-market price? Well, everyone. But what happens if all that glitters is not gold? Or even graphene? Welcome to rare metal and graphene investment scams.
Rare gold coins and bullion (coins minted from gold, silver or platinum) have long been regarded as hedges against inflation and recession. That’s precisely the pitch that scammers who run rare metal and graphene investment scams use to entice investors.
Many of these scammers focus disproportionately on elderly retirees with little or no experience in rare coins. The less you know, they figure, the easier it is to scam you. They’re right.
The value of rare coins depends very much on condition, not just rarity. Therefore, savvy scammers will yap a lot about rarity while withholding information on condition. That’s how they bilk unsuspecting customers out of substantial amounts of money.
In 2007, court cases were filed against four companies based in Texas operating out of the same address. They grossed more than $100 million a year by selling over-valued coins. Between 2010 to 2013, a California-based company by the name of Merit Gold & Silver made a whopping $1 billion. Merit went out of business a year later after their scam imploded. While they advertised gold bullion at a mere one-percent over cost, their salesmen delivered lesser coins to their customers in order to drive up their profit. And maximise the losses of their victims.
Is Gold Yesterday’s Precious Metal?
However, as hard as it might seem, some say that gold is yesterday’s precious metal. It now has competition from substances you may not even know exist. Rare earth elements like scandium and yttrium (no, the latter is not a misspelling). What makes scandium valuable is that it is a critical ingredient in the preparation of aluminum alloys. These alloys were in high demand by defence industries on both ends of the Cold War arms race. The Soviets used them in the design of their jet fighters. The U.S. used them in the design of the Strategic Defense Initiative (popularly known as ‘Star Wars’).
In addition, manufacturers require these same alloys to produce a diverse list of items. Aluminum tennis racquets and lacrosse sticks, for example, firearms and even dental preparations. Yttrium especially took off when the electronics industry transitioned from tubes to transistors. Demand exploded with the global proliferation of consumer products that incorporate LEDs. These include electrodes, lasers, and superconductors, among many more sophisticated components.
These Scams Can Be Big
The largest ever rare metals scam ever was run between 2011 and 2015 by the Fanya Metal Exchange, a rare metals trading company. According to a Chinese court, the 21 different defendants who were tried lost over $6 billion in investments belonging to 220,000 creditors across the country. Fanya’s rare metal holdings were ultimately sold off for $110 million, a mere pittance compared to the funds that were lost.
Then, in 2017 four conmen were convicted in London and imprisoned for having scammed investors out of £7.75 million. They told their victims that they were acquiring rare metals, but they turned out to be virtually worthless.
In 2019 three other individuals were convicted by a British court of scamming an unspecified number of consumers out of more than £1 million. Their victims were talked into making what they presumed to be an investment in rare metals. They were charged anywhere between seven and 200 times what was then the real market value. There were, however, no rare metals. It was a scam. The trio was sentenced to five years’ imprisonment.
But scandium and yttrium now stand to become yesterday’s precious metals too. The next super-valuable commodity waiting in the wings is a substance that isn’t even a metal.
The New Wonder Material
Graphene is an ultra-thin form of carbon invented in 2004 by two British scientists. They later shared a Nobel Prize in physics as a result of their efforts. Very simply, it’s the strongest material ever tested. Potentially, therefore, it has many practical uses, especially in electronics – including cellphones and computer screens – and in bio-technology.
Graphene is actually a basic component of many types of carbon, including graphite and charcoal. But it’s produced naturally in small quantities – when writing with a pencil, for example. So to meet the demand that everyone anticipates once it makes its way into consumer products, someone is going to have to find a way to produce it artificially. And in large quantities. Substantial funds are now flowing into R&D to make that possible. These are the factors that combine at this point in time to make graphene a fertile field for scammers.
Graphite and Graphene
Rare metal and graphene investment scams typically employ ‘boiler room’ tactics. In plain language, what that means is that scammers call potential victims out of the blue. The scammers offer what seem to be exceptionally good investment opportunities at exceptionally low costs. Sometimes, the investment is a total phony. In other cases, the investment might be real but it involves graphite or a similar-sounding substance, not graphene. In any event, until graphene hits the market even legitimate offers are at best long-term investments. Until then, beware of rare metal and graphene investment scams. ‘Scams such as these undermine confidence and trust in the market, and they can result in ordinary people losing thousands of pounds in savings,’ Britain’s Financial Conduct Authority (FCA) warned consumers in 2013, after noticing a rise in complaints involving graphene. Moreover, the FCA found that it has ‘yet to see any convincing evidence that there is a viable market for investors to make money from investments in rare earth metals,’ since purchasers require huge amounts and pay wholesale prices.
If you think you’ve been the victim of a rare metal or graphene investment scam, contact the fund recovery experts at MyChargeBack.