Chinese buyers suffer from counterfeit gold
The recent rise in gold prices has sparked a 'gold rush' in China, but this has been accompanied by an increase in gold fraud. Not all buyers can tell real gold from fake gold at first sight.
According to the country's government, thousands of Chinese have been tricked into spending money on 'fake gold' - low-grade or artificial gold - when they tried to buy 999 gold online.
Fake gold is becoming a big problem in China as more and more Chinese want to invest their savings in the yellow precious metal,' said Sean Raine, managing director of China Market Research Group, as quoted by CNBC.
According to the World Gold Council (WGC), Chinese consumers bought 603 tonnes of gold jewellery last year, up 10 per cent on the previous year. The demand for gold, combined with ignorant Chinese consumers and investors who can't tell the difference between 24-carat gold and low-grade gold, has led to an increase in fraud cases," Rein added.
One user who allegedly bought five gold pendants for 1,985 Chinese yuan (about US$280) on e-commerce platform Taobao said he discovered the gold was fake through a flame test. Fake gold darkens or takes on a greenish hue when exposed to a flame, while real gold becomes lighter when heated.
Local media and consumer websites such as Heimao Tousu, a consumer platform run by technology giant Sina, have reported a rise in gold fraud. Counterfeiting is not a new phenomenon for China. The economic powerhouse is a world leader in counterfeit and pirated products, purchased by both buyers who are unaware they are buying fakes and buyers who are actively looking for fakes.
Although online gold trading is growing rapidly, it accounts for only a small proportion of gold consumption in China, with most consumers still preferring to buy gold offline, according to the World Gold Council. The WGC reminds consumers not to trade the security of a purchase for suspiciously low prices," the international trade body said in an interview with CNBC.
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