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Gold scams and fraud are very common as investors seek opportunities abroad for new gold suppliers, sellers, miners and buyers. Gold prices keep rising, and so does the fraud. Most of the fraud is coming from West Africa from countries like Ghana and Sierra Leone, but there is also a high degree of risk from South Africa and China. China, South Africa and Ghana are the largest gold producers in the world, and no country is booming with gold investment like Ghana, so getting in on the action means dealing with significant risk.

There are endless combinations of gold scams. Gold scams can take the form of advance fee fraud, i.e. paying for gold that never arrives. Gold deals involving the internet are especially prone to scam and fraud. Gold coins and bars can be filled with lead or other metals and coated in gold. Claimed mining companies or gold sellers can also engage in scams or fraud by manipulating contracts and sales agreements, shipping complications, customs fees and claimed taxes. Scammers are increasingly registering fake companies with South Africa, Ghana and China government agencies, so checking to see if a company is registered is no longer a sufficient way to hedge risk. Investing in mining companies on a financial exchange or buying a gold ETF offers the least risk.

If possible, ask for a referral from a trusted source within the industry. If this isn't an option, get a list of licensed and registered companies from government agencies in the country where the gold dealer, buyer or supplier is located. Ask for references and never send money via Western Union. Because of the high risk, contact a company like Wymoo International for a background check or due diligence investigation, to be certain you are not dealing with a scam. For investigation and verification services, always use a private investigation or background check firm with field investigators in the actual country.

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Q: Gold scams - what are they and how to avoid the fraud?
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