This week a British judge entered a court order freezing the global assets of a Utah-based gold mining company called Sinaloa Gold Plc. The court concluded that the mining company may have engaged in fraud when it sold shares to U.K. investors. The judge found that one of Sinaloa’s officers, Glen Lawrence Hoover, a Utah resident, failed to explain to the court how investor money was spent. Mr. Hoover is one of the defendants in the case.
Recently I have seen an increase in inquiries from individuals who are interested in investing in gold mining operations, and from some who have lost money in this investments. I assume much of this is driven by the skyrocketing price of gold, but the challenge for investors is that this is a highly specialized area that requires significant technical expertise. Investors can be misled by complex technical descriptions, faked or doctored assay tests, and spectacularly high mine valuations.
