A ten ounce gold bar costing nearly $18,000 turned out to be a counterfeit.
The bar was filled with tungsten, which weighs almost the same as gold, but costs just over a dollar an ounce.
MyFoxNY reports:
Ibrahim Fadl bought the bar from a merchant who has sold him real gold before. But he heard counterfeit gold bars were going around, so he drilled into several of his gold bars worth $100,000 and saw gray tungsten — not gold.What makes it so devious is a real gold bar is purchased with the serial numbers and papers, then it is hollowed out, the gold is sold, the tungsten is put in, then the bar is closed up.
Chinese Fraud
The Secret Service is now investigating this latest counterfeiting.
But this isn't the first time this has happened...
In March, gold bars filled with tungsten showed up in England, Australia, and Hong Kong.
It has even been rumored that some of the 200 metric ton gold sold to India from the IMF contained tungsten.
Of course, no one is talking.
In the short run, this will mean your ability to buy gold bars will be slowed as New York gold merchants figure out how to regain credibility (or until the whole matter is swept under the rug).
One way to avoid buying fake gold is to buy it in smaller quantities from reputable merchants. Though it requires a great deal of sophistication to fill a gold bar with tungsten, the manufacturing techniques make it more worth it in large bars versus small coins.
Wealth Daily readers have used Asset Marketing for their gold coins for years with nary a complaint. You can find them here.
Straight to the Source
The source of these fake gold bars is a criminal Chinese gang that produced them during the Clinton years.
The story goes that between 5,600 and 5,700 400oz bars — 60 metric tons — were counterfeited by a sophisticated criminal organization...
The Chinese arrested many of the perpetrators shortly after the scam was uncovered, but not before a sizable amount of the gold bars were sold...
It's thought that more than 1.5 million 400oz tungsten blanks were manufactured in the United States. Of those manufactured, some 640,000 bars received gold plating and were shipped Ft. Knox, where they remain to this day. This was the impetus for Ron Paul's call to edit Fort Knox.
The remaining bars were gold plated and sold on the international market, where they show up from time to time in cities around the world.
This begs the question about the gold resting five stories below the Federal Reserve Bank of New York...
Could the planet's largest gold vault — containing 25% of the world's gold — be counterfeit?
Of course it couldn't... but don't hold your breath waiting for clarity.
Money Printing
In the aftermath of QE3 (or what some are now calling QE-finity, due to its never-ending nature), the price of hard assets must go up in relation to the U.S. dollar over the long term.
Silver, unlike gold, is much harder to counterfeit.
Due to the industrial nature of silver, it is melted down and used in manufacturing. This is something that would be sacrilegious to do to a gold bar with its certification numbers and seals.
Thus, fake silver bars would be more likely to be discovered.
The numbers I see are that gold is more than forty times more likely to be counterfeited than silver.
The silver that is counterfeited is usually in the form of bars that weigh ten onces and up.
U.S. silver coins that were produced before 1965 that are 90% silver and 10% copper are the most likely to be be real due to their small size.