Saturday, July 12, 2008

Beware the Gold Mining "Claim Scammers"

Gold Pans
Gold Panning Kits
Mining Equipment

In my earlier post titled "So You Want to Buy a Gold Mining Claim?," I used the term "claim scammers" to describe the less-than-trustworthy types who are in the "business" of selling claims these days. Please know that most individuals or companies who sell gold mining claims are legitimate and operating on a level playing field, so this post does not apply to them. It only applies to those who operate on the fringes with, at best, questionable business practices.

"Claim scammers" have been around a long time and worked their magic frequently during the heyday of Western mining during the 1800s and early 1900s. Like modern-day hucksters and con men, they were able to ply their trade primarily because of the gullibility, ignorance, or greed of their victims, who were plentiful at the time (and whose numbers may be increasing today due to the high price of gold and renewed interest in gold mining).

"Claim scammers" in the Old West used a number of methods to entice and ensnare their prey. Things really haven't changed much and though some of these questionable approaches may be a bit harder to pull off today than in the past, an adept hustler can still work you with little difficulty. Here are a few scams for you to consider:

"Salting" a claim. This is one of the oldest and easiest methods of getting the unwary to hand over their hard-earned money for claims that are borderline producers, worked out, or that contain little or no gold whatsoever. The scammer simply "salts" certain parts of the claim with placer gold fines, flakes, or nuggets and then has the prospective buyer take "samples" from the salted locations. When the unwary victim sees all that gold in the pan, the deal is cinched. Believe it or not, this scam was worked to great success time and time again during the California Gold Rush and sporadically thereafter, including right up to today. It also has a variation for lode claims, where barren host rock is "salted" by filling shotgun shells with fine gold and then shooting the gold into the phony gold ore where it becomes loosely impregnated.

Bogus documentation. Using computers and hi-tech reproduction equipment scammers today can easily produce or counterfeit bogus documentation dealing with claim production figures, assay reports, geologic summaries, title, ownership, and so on. One way to beat this approach is by asking the questions I outlined in "So You Want to Buy a Gold Mining Claim?," doing your own thorough independent research, and cross-checking references and suppliers. Remember the old adage? "If it sounds too good to be true, it probably is."

Securities fraud. This scam is usually employed to catch the "big fish" worth millions while little two-or three-thousand dollar guppies like you and I go pretty much unnoticed (probably a blessing in disguise). Still, I suggest you avoid higher-risk investments like gold options or futures and questionable or unproven mining stocks in favor of physical gold possession. "A bird in the hand ......"

Unpatented claim turnover. Though ostensibly legal, this is the most common claim "hustle" today and it is spreading like wildfire due to the current high price of gold. How does it work? Easy. You do the leg work and file the appropriate paperwork on an open and unpatented (the most common form of claim) placer or lode gold claim. After paying the associated permit and filing fees and spending perhaps a grand total of probably less than $250.00, you immediately put the claim up for sale for anywhere from a few thousand (low end) on up to tens of thousands (medium range) or even hundreds of thousands (high end) of dollars depending upon what you think the "sucker" market will bear. Where do you perform this magical "turnover?" By putting your claim up for auction on E-Bay or listing it for sale online, or in a mining or prospecting magazine. WOW! Nothing but clear profit for the seller. Legal? Yes. Ethical? Not in my book.

"Recreational" claim squatting. This too is a scam of sorts but it won't impact any prospective gold mining claim buyers because these claims are not for sale. In fact, the person or persons filing the claim in most instances know little if anything about placer or lode gold mining. Their main interest is in having a private recreation area for themselves and their friends on the weekends or during the summer months. So they file a claim, post it off limits to mining by you or I, then proceed to spend their time drinking beer, kicking back, and enjoying the great outdoors while never using or even possessing a single gold pan, let alone a dredge or other piece of mining equipment.

There are a number of claim squatters like this along the North Yuba River in Northern California (and elsewhere in the Motherlode Region) and they make my placer miner's blood boil. They've been getting away with this scam for years now because the appropriate authorities (BLM? US Forest Service? State Forestry Service? Or?) are either oblivious or stretched far too thin to investigate or prosecute. A sweet deal for the scammers though, isn't it? Your own personal campsite and recreation area right on the banks of one of the more scenic rivers in the entire Motherlode.

Anyway, at the risk of upsetting some of those claim scammers out there (which, by the way, wouldn't break my heart in the least), the truth needs to be told here. Keep your eyes and ears open and watch where you step. You'll enjoy gold mining a whole lot more and probably save yourself some money and heartache.

Let me know if I can help further.

If you liked this post, you may want to read: "Staking Your Own Gold Claim"

http://goldbedrockgold.blogspot.com/2008/07/staking-your-own-gold-claim.html

(c) J.R. 2008

Questions? E-mail me at jr872vt90@yahoo.com

2 comments:

  1. Good job J.R. For posting this to alert the future prospectors.

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  2. Thanks my friend. I appreciate your support and your comments. J.R.

    ReplyDelete