Germany Latest Victim of Phony Gold Bar Scam
Pat Shannan
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Would you buy a used car from this man? |
Amid international accusations that U.S. officials in the Clinton administration replaced gold in Fort Knox with phony, mostly tungsten bars that were later shipped to China and other places yet unknown, a German refinery has now discovered that it has received a bogus "gold" bar as well.
The video proof was shown on the German television station ProSieben that ran the news story covering W.C. Heraeus in Hanau, Germany, the world's largest privately owned refinery.
In the story, Wilfried Horner, head of the gold foundry, shows a 500-gram bar (16.0755 troy ounces) received from an unidentified bank. The bar had the right physical dimensions to be an authentic gold bar, but one of the Heraeus employees suspected something.
After the bar was cut in half, the TV audience could plainly see that the dark insides were tungsten, with only a coating of gold on the outside.
While the story never aired on American TV, it is available on the Internet.
Last fall, Rob Kirby of Kirby Analytics in Toronto reported that China's central bank had discovered nearly 6,000 400-ounce gold-plated tungsten bars among those it had recently received from bonded warehouses.
It was later learned that at least four counterfeit bars at other locations were found and that all had come from sources within the United States, including Fort Knox, according to the Chinese investigators.
As suspicions grow about counterfeit bars among those held in bonded warehouses for delivery against either COMEX or London Bullion Market Association contracts or shares of exchange-traded funds, investors could panic. It is believed this could be the reason for the blackout on news coverage in the United States on this story except for AFP.
Several metals have similar densities to gold. However, using these metals to produce fake gold is unprofitable due to their high cost. There are two metals that are suitable, from both a density and economic perspective, for manufacturing fake gold - uranium and tungsten.
These metals aren't without their negatives. Uranium can be radioactive. Tungsten is extremely brittle - the exact opposite of gold. Additionally, tungsten has the highest known melting point of any non-alloyed metal at 3,422 degrees Celsius (6,192 F),making it difficult to work with. However, it appears that at least one high-temperature furnace is producing gilded tungsten products.
Gilded steel is a unconvincing form of fake gold. A steel bar identical in size to the standard 400-troy ounce gold bars commonly used in bank-to-bank trades would weigh only 162.5 troy ounces (about 60 percent lighter) and would be easily identifiable as counterfeit.
Gold's unmistakable density, along with its scarcity, durability, and other qualities, made it attractive to be used as money for our nation's founders, and its theft through Federal Reserve fakery over the past century has provoked these current problems of "banker control" via paper notes and credit over what was designed to be the actual money.
Thus far, the commodity exchanges have disclaimed any responsibility for the purity of the gold bars they are delivering against contracts. However, as stories of gold-plated tungsten bars in bonded warehouses continue to appear, brokers say we can expect the commodity exchanges to be forced - not legally, but to meet competition - to modify their business practices to provide a guaranty of purity for any bars they deliver.
To maximize safety, it is advisable to trade now only for only smaller size coins and ingots, such as one ounce of gold content or less. One-tenth and quarter-ounce pieces will be desirable and usable during a hyperinflation or a depression. Individuals should deal only with companies that have a lengthy track record and in-house staff expertise. Trustworthy dealers have told us that if you have purchased coins and ingots from unknown sources, you may want have them checked out by an experienced independent third party, because even these can be counterfeited, but not nearly as likely.
The respected dealers with decades of integrity in their past tell us that these problems have been created by "big-time" international swindlers, not to mention governments, counterfeiting multi-ounce bars and should have no effect on the confidence of the individual investor who is exchanging his Federal Reserve note paper for gold coins.
For all of the reasons above, it would be advisable to take physical possession of the smaller sizes of gold coins and bars now, and know that what you own is genuine, solid gold.
And from "Before It's News..."
Tungsten Filled Gold Bars - GLD ETF WARNING
This is potentially chilling news for the gold markets -- word of tungsten filled gold bars coming from the Market Oracle site. As Before It's News has warned, there are many issues with "owning" any gold that is a paper product, as opposed to physical gold and if this story is true, you could see a huge spike in the price of gold in the near future as people scramble to own the real thing. Two issues have come to the forefront, according to Rob Kirby at Kirby Analytics...
1] - irregularities in the publication of the gold ETF - GLD's bar list from Sept. 25 - Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.
2] - reports of 400 oz. "good delivery" bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.
The reason to use tungsten to fill bars, as opposed to say lead or silver is based entirely on Physics and Economics 101. Tungsten, density of 19.35 g/cm3 is a near perfect match for the density of gold at 19.32 g/cm3. A bar of tungsten coated with gold would be very close to the same size and weight as a real solid gold bar. The main reason to use tungsten is the cost, which at $20 per pound is a small fraction of gold's $16,000 per pound. Large 400 ounce cast bars are easiest to fake because they can be cast, but coins would need to be stamped, something difficult to achieve with tungsten owing to its legendary hardness -- it's got a very high melting point and is difficult to work. Gold is soft, malleable and ductile, which is why it has been treasured for millennia. It will be difficult to spot the fake gold bars without sophisticated assaying equipment.
Here's where the story gets fun...
The amount of "salted tungsten" gold bars in question was allegedly between 5,600 and 5,700 - 400 oz - good delivery bars [roughly 60 metric tonnes].
This was apparently all highly orchestrated by an extremely well financed criminal operation.
Within mere hours of this scam being identified - Chinese officials had many of the perpetrators in custody.
And here's what the Chinese allegedly uncovered:
Roughly 15 years ago - during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] - between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of "tungsten" bars shipped to Ft. Knox.
The balance of this 1.3 million - 1.5 million 400 oz tungsten cache was also plated and then allegedly "sold" into the international market.
Apparently, the global market is literally "stuffed full of 400 oz salted bars".
If the market is stuffed full of 400 oz. salted bars, what are the chances that the GLD ETF has more than their share? Their prospectus contains this legal out...
Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA's standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.
...it's buyer beware in the gold market, no question. Work with a reputable dealer and own physical coins. Should you intend to take delivery of COMEX 400 ounce bars, send them directly to a trustworthy assay lab to verify you are getting what you paid for. If even half of this turns out to be true, the price of real, physical gold could rocket.
UPDATE: The Central Bank in Ethiopia discovered a fake gold bar problem a couple of years ago, as this article in the Museum of Hoaxes attests.
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