Rare Metal and Graphene Investment Scams

Who wouldn’t want to buy gold at a below-the-market price? Well, everyone. But what happens if all that glitters is not gold?

Rare gold coins and bullion (coins minted from gold, silver or platinum) have long been regarded as hedges against inflation and recessions, which is precisely the pitch scammers use to entice investors ̶ who are disproportionate elderly retirees with little or no experience in rare coins. Their value can vary substantially depending on condition, however, not just rarity. Savvy scammers have been known to take advantage of this to bilk unsuspecting customers out of substantial amounts of money. In 2007 court cases were filed against four Texas-based companies operating out of the same address that grossed more than $100 million a year by selling over-valued coins. Between 2010 to 2013, a California-based company called Merit Gold & Silver made $1 billion, only to go out of business a year later after their scam imploded. While they advertised gold bullion at a mere one-percent over cost, their salesmen delivered lesser coins to their customers instead in order to drive up their profit.

Gold Is Yesterday’s Precious Metal

As hard as it might be to believe, however, gold is yesterday’s precious metal. It has now been replaced in that hallowed position by substances you may not even have heard of, rare earth elements like scandium and yttrium (no, the latter is not a misspelling). What made scandium valuable was its use in preparing aluminum alloys used by defense industries on both ends of the Cold War arms race. The Soviets used these alloys in the design of their jet fighters while the U.S. used them in the design of the Strategic Defense Initiative (popularly known as “Star Wars”). In addition, these same alloys are used to manufacture items as diverse as aluminum baseball bats and lacrosse sticks to firearms and even dental preparations. What made yttrium valuable was the transformation of the electronics industry from tubes to transistors, and the global proliferation of consumer products that incorporate the LEDs, electrodes, lasers, and superconductors, among many more components, that are manufactured using it.

But even scandium and yttrium may soon be displaced by another substance that isn’t even a metal.

The New Wonder Material

Graphene is an ultra-thin form of carbon invented in 2004 by two British scientists who later shared a Nobel Prize in physics as a result of their efforts. Being the strongest material ever tested, it potentially has many practical uses, especially in electronics ̶ including cellphones and computer screens ̶ and bio-technology. Graphene is actually a basic component of many types of carbon, including graphite and charcoal, but is naturally produced in small quantities ̶ when writing with a pencil, for example. So to meet the anticipated demand for graphene once it is integrated into consumer products, it will have to be produced artificially. Substantial funds are now being invested in R&D to make that possible. These are the factors that combine at this point in time to make graphene a fertile field for scammers. When you are victimized by fraud, you are generally entitled to receive a refund or, in certain circumstances, apply for a chargeback.

Rare metal and graphene scams typically employ what are euphemistically called “boiler room” tactics, in which potential victims are “cold called” out of the blue and offered what seem to be exceptionally timed investment opportunities at exceptionally low costs. Sometimes the investment is a total phony, while in other cases the investment might be real but it involves graphite or a similar sounding substance, not graphene. In any event, until graphene-equipped products hit the market (something that is widely assumed will occur no earlier than 2020), even legitimate offers have to be regarded as long-term investments.

“Scams such as these undermine confidence and trust in the market, and they can result in ordinary people losing thousands of pounds in savings,” Britain’s Financial Conduct Authority (FCA) warned consumers in 2013, after noticing a rise in graphene-related complaints. Moreover, the FCA found that it has “yet to see any convincing evidence that there is a viable market for investors to make money from investments in rare earth metals,” since purchasers require huge amounts and pay wholesale prices.

If you think you have been victimized by a carbon credit trading scam, consult with our fund recovery experts at MyChargeBack.