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Old 03-13-2017, 08:36 AM
Finmac Finmac is offline
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Default Beware Gold Fraud



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Article copied from Reuters...
You don’t need to be a conspiracy theorist to find this worrying: a 1kg gold bar, certified as 99.98% pure by XRF (X-ray fluorescence) tests, turns out to have been drilled out and largely replaced with tungsten. This bar was discovered only because it was 2 grams lighter than it ought to have been: the forgers failed to add quite enough gold to the outside of the bar to make up for the weight lost when they replaced gold with tungsten. But if they’d gotten the weight right, it would probably still be circulating today.

Of course, there are means of testing gold bars beyond just weight and XRF. If you can weigh the bar accurately, then you can test for purity by essentially dropping it in a bucket of water and seeing how much the water level rises: a gold-covered tungsten bar will displace more water than a pure gold bar. Alternatively, for $3,000 or so you can buy a micro ohm meter, which is easily sensitive enough to tell the difference in conductivity between a pure gold bar and one which is largely tungsten.

But as far as I know, these tests are not particularly commonplace among gold dealers, and in any case only a minuscule fraction of the gold bars in the world are physically traded, changing hands from one owner to the next — the obvious point at which tests like these would be conducted. If you own gold — if you’re a central bank, say, or a physical-gold ETF, or even if you’re just a Ron Paul or Glenn Beck type with your own personal stash — then there’s no realistic chance at all that you’re going to go bar by bar through your own holdings, testing each one.

In the case of gold, then, what JK Galbraith famously called “the bezzle” — the amount of wealth that people think they have, which in fact they don’t have — could be truly enormous. If there are 1.3 million salted 400 oz bars in existence, and each one is 75% tungsten, then that makes 390 million ounces of gold which in truth isn’t there. At $1,660 per ounce, that’s over $600 billion which people think they own but don’t. To put that number in context, it’s roughly half the total quantity of subprime mortgages which had been issued at the height of the housing bubble.

On the other hand, it’s also possible that the number of salted 400 oz bars is zero, that the 1 kg bar recently discovered was an amateurish aberration, and that there’s nothing to worry about at all. But the economic incentives here are so enormous, for people looking to make a fortune in the fake-gold-bar industry, that I very much doubt no one has tried. And statistically speaking, if a bunch of people have tried, then some subset of those people will have succeeded.

So what to make of the fact that no salted 400 oz bars have yet been found? On the one hand, it can be viewed as very worrying — as being an indication that the gold markets are very bad at uncovering such things. On the other hand, you’d think they’d be good enough at it that they would have uncovered at least a small percentage of the salted bars outstanding — and if they’ve uncovered no such bars at all, then that can be taken as an indication there aren’t any salted bars outstanding.

In any case, there’s clearly now serious tail risk for anybody in the physical-gold market. And like most tail risks, measuring and/or insuring against it is extremely difficult. Any store of value has problems, be it fiat currency or sovereign debt or bitcoins. This latest discovery just goes to show that the problems with gold aren’t just the obvious ones surrounding things like the risk that the price of gold might plunge. There are non-obvious ones, too, which have the potential to be even bigger.
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Old 03-13-2017, 01:38 PM
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I'm heading home to check all of my 400oz bars now. The eBay seller said they were genuine and I got a really good deal on them. Keeping fingers crossed...
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Old 03-13-2017, 02:01 PM
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Not that electricians are scientists, but as an electrician I can't see how an ohm meter could tell if a gold bar had a tungsten core.
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Old 03-13-2017, 02:36 PM
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Tungsten is only 0.36% less dense than gold.

Assume on a 1kg gold bar that 90% of the gold is replaced with tungsten.

The bar will be 0.32% lighter, or 3.24 grams lighter. About the weight of a pre-1982 penny. You will need a very accurate scale.

If only 30% of the gold is replaced with tungsten, the bar will only be 1 gram lighter. That is going to be quite hard to detect.

As far as volume displacement in water, if they made the gold bar larger to have it contain 3.24 grams more tungsten, then it will be larger by the volume of water displaced by 3.24 grams of tungsten. Tungsten is 19.25 grams per cubic centimeter, so 3.24 grams is going to have a volume of .168 cubic centimeters. 1 cubic centimeter is more commonly known as 1 milliliter.

So the gold bar filled with 90% tungsten will displace 0.168 milliliters. One teaspoon of water contains 4.93 milliliters.

The gold bar filled with 90% tungsten will displace about 1/32 of a teaspoon of water more than a 100% gold bar.

Better not spill any water when you are measuring!
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Old 03-13-2017, 03:23 PM
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i guess Finmac really doesn't like PMs?
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Old 03-13-2017, 03:32 PM
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i guess Finmac really doesn't like PMs?
Certainly would appear to be the case.

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Old 03-13-2017, 05:32 PM
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I'd sure like to own an XRF.
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Old 03-13-2017, 07:01 PM
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This illustrated one of the reasons I chuckle when preppers claim there will be a resurgence of PMs as currency of exchange when SHTF. As if the greater population has any idea how to value or even identify PMs; apparently even the pros are getting swindled. As for me, you could probably take a ****, spray paint it gold, and I couldn't tell the difference between that and a 24ct nugget.

I understand the investment strategy, but outside an established market, I don't see the value. At least you can use gold painted **** as fertilizer...
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Old 03-13-2017, 07:32 PM
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This illustrated one of the reasons I chuckle when preppers claim there will be a resurgence of PMs as currency of exchange when SHTF. As if the greater population has any idea how to value or even identify PMs
People around the world seem to have already figured it out during regional disruptions. Chuckle indeed...
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Old 03-13-2017, 10:34 PM
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You can always melt it down. Tungsten is not going to melt and it will be quite obvious. It does make barter a little slow :-)
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Old 04-12-2017, 09:06 AM
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Default Precious Metals Counterfeit Detection

We don't even bother with an XRF, because they do not penetrate deep enough, as demonstrated by the Reuters article (and are extremely expensive to boot.) We would begin by testing with a Sigma Metalytics Precious Metals Analyzer, weighing with a professional scale (see Fermion's note on weight), manufacturer reputation and assay certificate. The best kilo bars are always accompanied by an assay certificate for which the serial number on the bar matches the serial number on the certificate. Only buy from a dealer that offers an authenticity guarantee, or test to meet the aforementioned criteria.

Worth reading our article "Counterfeit Gold and Silver is on the Rise"

Regarding the utility of pms in SHTF situations? While potentially not of the greatest value immediately, a community will return to a commerce situation after the immediacy of food and water (and likely ammo) needs are met and bartered for. That commerce will not resume with fiat currency, but likely with pms.
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Old 04-12-2017, 09:08 AM
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When you work in the gold fields, those are the first three words you should learn.
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Old 04-12-2017, 09:17 AM
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Quote:
Originally Posted by dmas View Post
Not that electricians are scientists, but as an electrician I can't see how an ohm meter could tell if a gold bar had a tungsten core.
Beyond surface conductivity, no, I don't see it either.
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Old 04-12-2017, 10:28 PM
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Quote:
Originally Posted by woodzman View Post
Beyond surface conductivity, no, I don't see it either.
Put the probe at each end of the bar, or opposite sides of the coin. The counterfeit item will have a medium resistance core in parallel with a low resistance cladding. The genuine article will have a low resistance core in parallel with a low resistance cladding. The difference is small, but measurable.

The difficult is measuring the resistance of a short piece of fairly good conductor, you need a specialized instrument.
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Old 04-12-2017, 10:44 PM
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Because of the skin effect you only measure the outside, not the core.
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Old 04-13-2017, 09:32 AM
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Skin effect is seen with alternating current (AC). Resistance is normally measured with DC.
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