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How a Single Wedding Ring Led to a $6 Billion Gold Hoax

People really wanted to believe there were 13 million pounds of gold there for the taking

(Bryan F. Peterson/CORBIS)
smithsonian.com

Blame its perceived rarity or just its bling factor — there’s something about gold that has the power to dazzle even reasonable people. Atlas Obscura’s Eric Grundhauser tells one such tale: the story of how the world’s biggest gold hoax started with a single wedding ring.

The ring in question belonged to a mining prospector named Michael de Guzman, writes Grundhauser, and de Guzman used shavings from it to convince investors that a supposed gold mine in Borneo was stocked with up to 13 million pounds of gold. Since de Guzman’s “samples” could not be verified against other pieces of gold, writes Grundhauser, they formed the basis of a growing scam that ultimately drove stock in mining company Bre-X to rise to over $6 billion in the late 1990s.

Of course, there was no gold at all, and after the Indonesian government got involved in the mine and demanded independent verification of the underground trove, de Guzman died under mysterious circumstances. For the fascinating story, be sure to read Grundhauser’s article — it’s full of details on how a huckster with a wedding ring and a bit of wishful thinking was able to pull off a true financial coup.

The entire global supply of gold ever mined would fill just three Olympic-sized swimming pools, and over 60 percent of that gold has been mined since 1960, according to Forbes' Augustino Fontevecchia Too bad none of it was in the fake Borneo mine: Investors saw their money disappear when Bre-X, the company that owned the mine, collapsed in 1997.

So why did investors flock to a fake gold mine with their hard-earned dollars? Part of the desire to buy gold can be found in its history as a safe haven for skittish investors. The Wall Street Journal’s Ese Erheriene explains that “gold is traditionally considered a safe asset in which to store money, as it maintains a stable level of value. As a result, demand for the metal tends to spike in times of social, political or economic uncertainty.” Even, apparently, if it’s just a glittering promise.

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