Mining fraud is rare today, but, as in any type of business, there are still a few bad apples who pop up from time to time to steal people’s money. Don’t let yourself become one of their victims.

Following are some common warning signs of mining fraud:

• The company has a secret or proprietary process to extract gold, silver, or platinum from rock that conventional tests cannot detect.
• Instead of selling shares of stock, the company is offering to sell the ore itself, and extract the metal from your ore for a fee. This is known as a “dirt-pile scam.” By not selling shares, the promoters are avoiding regulatory oversight, making it much easier to take your money.
• If there is any pressure buy right away, forget it.

There are plenty of honest and well-run mining companies to invest in. If you have any doubt about the honesty of a mining or any other type of company, do not give them your money!

Below are links to other websites about mining fraud.

• Nevada Commission on Mineral Resources
• Arizona Department of Mines
• Mineral Business Appraisal: Gold is where you find it

Although Nevada and Arizona are leading the effort to keep the phonies out of the mining business, they do not have the ability to investigate and go after every suspicious mining company. In fact, International Precious Metals, whose Arizona property supposedly contained gold detectible only by their own secret assay process, succeeded in getting a court order in 1994 to stop the Arizona Department of Mines from advising investors not to buy International Precious Metals stock. Even with their court order, however, the company went bankrupt in 1998, without producing any gold. 

For recent trends in mining swindles, see R.T. Naylor’s article, The alchemy of fraud, published March 2007 in the journal Crime, Law, and Social Change. 

[Mining Swindles] [A Hole in the Ground] [Other Mining Frauds] [Mining Fraud Links] [Other Mining History]

10/10/2009