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Gold fraud rate drops with falling number of factories - Tue Mar 26 14:43:08 2013

Published: 26/03/2013 02:43:08 PM GMT
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Dealers in the Saudi gold market have discovered that around 15 percent of small and medium-sized workshops and gold manufacturers have left the market over the last year, which has inadver (more)

Dealers in the Saudi gold market have discovered that around 15 percent of small and medium-sized workshops and gold manufacturers have left the market over the last year, which has inadvertently lead to a decrease in fraud.
This comes in the wake of possible misconduct plaguing the gold market, where cases of fake seals of authenticity were reported.
Ahmad Al-Sharif, member of the National Committee for Precious Metals and Gems in the Council of the Saudi Chamber, said: “With a decrease in the number of gold factories, the market has become more organized, dealings with merchandisers have become more transparent and the number of fraud cases have been reduced.”
He said: “In the past, a larger percentage of workshops commit violations that go unreported.”
Al-Sharif clarified that the National Committee is “waging a war against unlicensed gold shops.”
Saleh bin Mahfouth, a member of the Gold and Jewelry Committee of the Chamber of Trade and Industry in Jeddah, has said that gold manipulation has become a widespread phenomenon.
“In general, gold in Saudi Arabia is being tampered with,” he added.
Bin Mahfouth told Ashraq Alawsat that tampering with the composition of gold often takes place in faraway neighborhoods away from the mainstream market.
These workshops are operated by expatriate workers, he claimed. Some of them use fake seals for jewelry, which necessitates testing by experts to assess its level of purity, he added.
Bin Mahfouth said gold dealers had reduced the number of branches by 50 percent during the past two years.
“The price of gold has increased six-fold during the last few years, which has decreased the rate of purchase. Some dealers left the market altogether while others reduced the number of their branches,” he said.
He pointed out that a number of gold factories and workshops had left the market for good because of price increases and the demands of operating their facilities, including the renewal of licenses.
This, according to him, has inadvertently contributed to the organization of the gold market.
As for fears of misconduct in dealings, Al-Sharif says: “I think these fears are overrated because there are strict standards in the Saudi gold market from the Ministry of Trade that make everyone extra careful to prevent foul play.”
Al-Sharif said that those guilty of altering the number of karats will be subject to criminal investigation and heavy fines of up to SR 100,000, the closing down of the factory and the showroom and even possible imprisonment.
There are deterrent factors and goes to show that the matter is not to be taken lightly, he said.
Faced with these issues, Saudi designers are offering a number of recommendations. A key proposal is the establishment of a center that is specialized in gold-testing and jewelry. They are also highlighting the need to raise awareness about gold fraud via modern channels such as the Internet.
They also called for random testing for company offices, factories, sales points and showrooms to ensure the safety and quality of the products.

Reproduced with permission from Arab News




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