Hundreds of Kenyans are falling to gold scam syndicates following their ignorance about how the precious metals business is run.
The scam is prevalent since a number of people seeking to buy the precious metal opt for underhand dealings to avert taxation.
The Chamber of Mines Chairman CP Mwangi said it was regrettable that most of those who have lost millions of shillings to the scammers did not follow the procedure set in the law.
He said gold has a ready market worldwide hence anyone purporting to sell to a buyer locally is just but out to defraud ill-informed citizens.
Mwangi cited a case of a tube purported to be gold from South Africa, which was circulated in Nairobi and of which some senior officials and bankers were conned.
The lobbyist said most of the con games involved the coating of metallic items such as iron and copper with brass, which most people pass off as gold.
“The problem we are having is that people want to do business without involving professionals yet they can work with the chamber and the ministry to help them recognize the dealers,” Mwangi said.
His sentiments followed the arrest of 15 people linked to a scheme where a member of the Saudi royal family was conned of Sh250 million by fraudsters posing as gold dealers.
Metallic pieces can be cut well and laced with brass to hoodwink an uninformed buyer. It is happening in the sale of gemstones too. Some of them are cooked in a laboratory and sold off as precious metals yet they are not.
Chamber of Mines Chairman CP Mwangi
The lot was linked to the fake gold seized in a posh home in Kileleshwa where sledgehammers and a number of cars used by the syndicators were also recovered.
The DCI, in effecting the arrests, warned that the number of fake gold dealers has reached alarming levels in the country, calling for caution among prospecting buyers.
Mwangi says such syndicates thrive by taking advantage of the fear of gold buyers to follow the law and falling to the ‘flamboyance’ displayed by the conmen.
And to end the woe, Mwangi said the Mines and Geology Department has a laboratory at Industrial Area, Nairobi where the purity of precious metals, including gold, can be tested.
The ministry acquired an X-ray Fluorescence Spectrometer which can test gold for impurities. The unit measure for pure gold is 24 carats.
“Let Kenyans be advised against buying gold or gemstones they don’t know. Let us not buy such items but take to the ministry’s laboratories for testing before committing any money,” he said.
“What people are buying on the streets is brass which once cooked, looks like gold. Some items are gold plated of which unless you cut through, you will always think it is gold.”
Mwangi further warned Kenyans against buying the metals from unlicensed dealers, being the majority in the country.
He added that no foreigner should purport to be travelling from another country to sell gold in Kenya since all countries can access the gold market directly.
“Let those interested in precious gems and gold buy them from licenced dealers and most importantly take one with a certificate of test. The best way is to go with the seller to the laboratory so that you are not conned,” he said.
Mwangi said the chamber is pushing for Kenya to establish a gold refinery which is accredited by London Bullion Market, London Metal Exchange, and World Gold Council.
“The entities are now represented in South Africa, which can establish a branch in Kenya. For gemstones, there should be established a Gem and Mineral Laboratory,” the chairman said.