1) Hi, I wondered if you or your readers might know anything about
fake gold coin/bars from China cropping up. It seems that tungsten
has almost the same density as gold and hence can pass the common
specific gravity test.
China has most of the world's remaining reserves of tungsten and
some companies there are selling fake gold coins/bars on the Internet:
2) This is not speculation -- several fake gold bars , worth $100,000 , were found in
Manhattan a few months ago and others in Britain before that:
3) The German Government has stored its gold reserves in New York for 70 years (to protect
them from seizure by the Soviets during the Cold War.) A few months after the news
reported gold fakes being found in Manhattan, Germany announced that it would ship its
674 tons of gold back to Germany:
4) However, fakes have also been discovered in Germany and Australia:
5) As word of these fakes gets out and becomes widely known, it may
cause the price of gold to fall as investors sell in panic. Bad money drives
out good. Even if you have confidence that the gold coins you hold are genuine,
they will be of little value if most possible buyers will not buy them for fear
they are fake.
5) However, finding an alternative store of value is a difficult problem. It is difficult
to distinguish synthetic gems nowdays from the real ones. Platinum might be
a possible alternative.
Yes, I'm aware of this problem and it´s only going to get worse as the price of precious metals (PM) increases. If we think of a post economic collapse society where PM are a big player, avoiding fakes and counterfeits would be a big challenge.
Even reputable people may end up selling gold they've had for years without knowing they are selling a bar or coin with a chunk of tungsten on the inside. This is happening right now.
I dont see this causing the demand or price of PM to drop based on fakes alone, but I do see a problem where there might be more distrust, and anyone that can verify the internal content of the PM (x-ray?) would sure get the most customers, so maybe there's a business idea right there.
As far as avoiding fake bars and coins, here are my recommendations:
1)Buy from reputable dealers. This should be obvious enough.
2)Buy recognized forms of PM. If you snatch some broken 14k or 18k junk gold at a fair price, broken chains or wedding bands as "PM pocket change", that's fine, but your bulk of PM should be in well recognized coins such as American Eagles. The more detail the coin has, the harder it is to counterfeit. Avoid those bulk bars of silver and gold that just have a stamp along with a card certification. Even original ones (like credit Suisse) have been bough, drilled and emptied on the inside and refilled with some other metal. They are original, the number and certifications are correct, but someone just removed most of the gold leaving just the outside layer. This is much harder to do with a small coin with detailed impressions.
3)Take a very good look at the images, letters and numbers on the coin. American Eagles have very fine, crisp details that arent easy to counterfeit. Counterfeits will often have slight differences, letters and numbers not looking as clean cut and the detail of the liberty image may look worn or blurry.
4)Stick to what you know. If you usually handle Eagles, that's what you'll know best. If you handle Maple leafs or Krugerrands most of the time, that's what you'll know and be able to tell between a counterfeit and the real one.
5) Small denominations are not as profitable to refill with another metal. While small gold coins can be counterfeited, there's greater chance of detecting it compared to a bigger bars that is impossible to notice any difference but may have some other metal on the inside. As long as you verify that its actually 24k gold with a tester, small, well recognized coins with plenty of detail are therefore your safest bet.
Oh! About European countries that kept their gold in USA. Did you know that many countries found out that most of their gold was missing when they actually looked into the vaults? The banks had... ehhem... somehow "loaned" that gold, and was hard to find its wearabouts.. if entire countries cant trust banks with their gold, neither should you!
Take care everyone,