Fake gold bars infiltrate precious metals market

Warning: some of your $18,000 10-ounce gold bars might actually be filled with tungsten. Gold goes for about $1800/ounce; tungsten is $1/ounce.

Chemical engineer Ibrahim Fadl, who owns a business in Manhattan's Diamond District, strips away the outer layer of a 10-ounce bar of what he thought was pure gold, sold to him by a customer at his gold refinery business.

The shell peels off like foil on a chocolate bar.

"It's got to be somebody really, really professional," said Fadl. "When I analyzed them, it showed they are tungsten."

Tungsten is a metal used to make military weaponry, drilling equipment and even jewelry. Gold and tungsten have almost the exact same density, so a substitution of metals would be difficult to detect.

Diamond District Businessman Tricked Into Paying $100K For Fake Gold Bars (Via TYWKIWDBI)

Mark Frauenfelder is the founder of Boing Boing and the editor-in-chief of MAKE and Cool Tools. Twitter: @frauenfelder. Come and hear Mark speak at the ALA conference in Chicago on July 1.

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bardfinn

Holy Cow!

FTA: “Nessim said officials with the Swiss brand were horrified and had not heard of the scam.”

Horseradish! Bald faced Horseradish!
oasisob1

The 1% is sticking it to the .1%. My faith is shaken.
- Ipo
  
  Just a mistake. There was a mix-up rotating stock.
  That one was supposed to go to Fort Knox.
CSBD

What is this going to do to the Doomsday Preppers economy? Without huge ass bars of gold, how are they going to barter for a BigMac in a post apocalyptic hellscape?

Actually, the tungsten would at least be useful for fashioning armor piercing bullet penetrators (assuming they had some sort of power source and a really good lathe)
- semiotix
  
  I always told my acquaintances in the Apocalypse Soonish crowd that they should chop up their stockpiled gold and put it into shotgun shells. You can have the kind of post-apocalyptic society where people still care about gold, or you can have the kind where you’re shooting at people until you’re dead or a warlord, but you don’t get both. In either case, you might as well put that metal you’re hoarding to good use.
  
  For myself, I kill three birds with one stone by hoarding only Goldschläger.
http://www.youtube.com/user/Freethinkersanon Christopher

For the record, while I’d probably only pay $1 an ounce for it, I would like to have some tungsten. But only because it’s a cool metal you don’t often see, and I think a little lump of tungsten would be an amusing conversation piece.

And if I could find a way I’d mail it to my thirteen-year old self, back when I had a chemistry set and was trying to collect samples of as many elements as possible.
- http://twitter.com/hpasto Will P.
  
  You should have plenty of tungsten around. That is if you have any incandescent light bulbs left. The filament is tungsten.
  - http://www.youtube.com/user/Freethinkersanon Christopher
    
    When I was an element-obsessed kid I often though about breaking open an incandescent light bulb and extracting the filament so I’d have a sample of tungsten, but I never knew whether it was pure tungsten or an alloy.
    
    It was very important to me to have the purest possible forms of the elements I collected.
    - ymendel
      
      If you haven’t already, I suggest you read Oliver Sacks’s memoir, Uncle Tungsten.
  - fuzzyfuzzyfungus
    
    The trouble with the filaments, while they are genuine enough, is that tungsten really only gets interesting in slightly larger quantities.
    
    With a density just shy of 20 grams per cubic centimeter, even quite modest chunks of the stuff trigger a visceral ‘this has no business being so heavy’ double-take when you pick them up. The filaments, of course, have a similarly alarming weight for something about as thick as a human hair; but they just aren’t big enough for that to be terribly dramatic or even noticeable without instruments.
    - nixiebunny
      
      My job entails the winding of fine wire grids using 10 micron diameter gold-plated tungsten wire. I assure you that it’s light as a feather.
      - http://www.gyrofrog.com/ Gyrofrog
        
        Sounds cool! Are you in the U.S.? Are there still jobs like that here?
        
        (I used to solder at IBM. I bet very few people in the U.S. still do what I did, and near as I can tell, IBM doesn’t make physical objects anymore)
- http://twitter.com/sqlrob Rob
  
  It’s currently going for $1.26, so you’re lowballing it.
- alfanovember
  
  Tungsten is commonly available in 1/8″ by 6″ rods, packaged like pencils. Head on down to your local welding supply and ask for TIG electrodes. Be sure to specify you want the non-thoriated type, which have green paint on the end.
  
  Fun stuff – it’s density tends to surprise your ingrained assumptions about how much something of those dimensions ought to weigh.
- spejic
  
  They probably have some at your local hobby store. They are used as weights for pine cars (although I use them to help balance my tail heavy model aircraft).
Rider

This has been going on for at least half a decade now and anyone in the gold industry trying to claim they have never heard about it is full of it.

http://en.wikipedia.org/wiki/Tungsten#Gold_substitution

It’s just one of those known facts that a large portion of the gold out there is really tungsten.

This is one of those “why is this suddenly a big news story” stories.
- That_Anonymous_Coward
  
  Think of them like getting a counterfeit $20 bill.
  Some people engage in attempts to get rid of it, knowing if they get stuck with it they are out the cash and it is lots of paperwork and hassle to do the right thing.
  
  This lets them claim they were scammed and unaware of it and completed a fair trade so they can’t be at fault.
Glippiglop

“Fadl bought four of the bars, exchanging them for smaller gold bars, because the customer would not take cash.”

How he could not sense he was being scammed is beyond me, it’s like a Monty Python sketch. The customer may as well have said “Hey, I’ve got $100 dollars that I need to trade so that I can raise some cash before the weekend. Can you give me $50 for it?”
- bardfinn
  
  Smaller bars in “the same” amount. Like making change for a hundred in tens with 95 in fives.
Guest

Oh this should be fun. Especially with the Germans wanting to audit gold reserves I wonder how much of a problem this really is?

http://www.cnbc.com/id/49540593/The_Germans_Are_Coming_for_Their_Gold
http://sr105.com/ Harvey

Isn’t there some sort of electrical test they could use to check the bars?

Following the wikipedia link above, there’s a Popular Science article about how to make these bars that uses a picture of the same type of bars in the video.

http://www.popsci.com/diy/article/2008-03/how-make-convincing-fake-gold-bars
- bcsizemo
  
  Agree. If not purely electrical, perhaps electromagnetic?
  
  Of course if these are suppose to be 99.9% pure (or so) then a hardness test would show off the fakes really quickly…but then you’d have a physically damaged bar (I don’t even know if that matters.)
- nixiebunny
  
  Tungsten has about 2.3x the resistivity of gold, so they could measure the bulk resistivity of the bar by clamping electrodes on each end and measuring the voltage drop with a big current and a micro-voltmeter.
- bardfinn
  
  The problem with electrical tests is that gold is an excellent conductor, so you have to pump a /lot/ of current through a bar with /very/ well characterised connections in order to analyze the hysteresis loss curves. Electricity is characterised as, and notorious for, flowing on the outside of a conductor – so you’d pretty much be attempting very hard to do something very unlikely.
  An electromagnetic test would be more likely to help, as tungsten does not have a similar EM resonance, but again, you’re talking about the kind of energies that are required to penetrate the gold outer layer, which is /an excellent conductor/. Which likely involves physical distortion of the gold from Lenz’ effects (eddy currents: think squashed coins).
  A previous article on BoingBoing about this possibility : http://boingboing.net/2008/03/17/how-to-make-fake-gol.html
  In the comments someone mentions using liquid nitrogen to take advantage of the different expansion rates of tungsten and gold; this would cause distortion (from thermal expansion distribution stress) of a pure gold bar, which is right out*. Someone else mentions using thermal inertia (how many calories does it shed in X time after Y calories are pumped in in c time given Z volume) – this takes a long time.
  
  The best way to tell seems to be to “ring” the bar, and see if it sounds right. Previous forgeries had been discovered this way by experienced gold handlers/sellers/buyers. Given what the bar this guy got looked like, I think “ringing” the bar would have told him it was inauthentic. But I wasn’t there.
  
  *gold has a very high melting temperature, and the physical appearance of gold bars is important to their resaleability without the expense of re-casting them, so destructive testing is not viable for many buyers. Some gold bars even have “laser-etched holograms”, interference holograms, on their surfaces, to help authenticate them.
  - nixiebunny
    
    My quick calculations indicate that the resistance end-to-end of the gold bar in the video is about 5 micro-ohms. That would be difficult, but not impossible, to measure at DC with very good end clamps and a 100A test current – about 0.5 millivolts. A guy could build a gizmo to do that on a production basis for about a thousand dollars.
- sweetcraspy
  
  You’re supposed to bite it.
http://www.facebook.com/postelwait Cameron Postelwait

i usually make sure i have 3 years of gold, food, and bibles in my basement, but that’s only if I go easy on the bibles.
- http://www.facebook.com/profile.php?id=1515015318 Missy Pants
  
  Me and my 3 years worth of water will be over in a moment.
http://www.facebook.com/profile.php?id=1515015318 Missy Pants

Can someone explain to me why we covet this stuff so much? I mean it’s pretty and shiny, but like diamonds, pretty useless to the average person. Why do we stockpile it? Bonus points if you can reference Newton.
- semiotix
  
  It’s a very good question, but do a little experiment first. Take a $20 bill and light it on fire.
  
  Did you do it? Of course not. No matter what you hear about “fiat currency” and “specie” and so forth (and there are meaningful distinctions between the various phyla of money), the reasons you covet that twenty are the same as the reasons you covet gold. (Or, anyway, you should–if not, send me your gold immediately!) Essentially, you genuinely believe that someone will give you something you can eat or wear in exchange for it. You covet it because it is coveted, and while that may not be the path to true enlightenment, it’s also not as dumb as it sounds. In any event, animal behavior studies show that you’re not alone. Monkeys, with their human-like brains, are the same way–and so are crows, whose brains are quite different.
  
  As dumb as we are about finances, humans in a pinch are remarkably clear-headed about the nature of money. Examples of real “gold fever”–clinging to gold or other forms of money when their monetary value has disappeared entirely–are pretty rare. If you risk your life in a rickety old gold mine, that’s a calculated risk: you know that you might come out alive and rich, with a society ready to accept your gold. But nobody would be out there mining gold in a genuine post-apocalypse!
  - Antinous / Moderator
    
    Take a $20 bill and light it on fire. Did you do it? Of course not.
    
    To be fair, for some reason, I can’t bring myself to throw my gold ring into the fire either.
    - cellocgw
      
      I bet someone (not me) will volunteer to bite the ring and your finger off for you…
      - Antinous / Moderator
        
        I can’t wait to hear the minstrel sing The Lay of Nine-Fingered Antinous and the Slap of Doom.
- fuzzyfuzzyfungus
  
  If you happen to need a physical representation for your consensual-mass-hallucination currency (and, unless you really enjoy barter economies and don’t necessarily have a state powerful enough to maintain a competent fiat currency, you probably do) gold is a handy choice:
  
  It’s fairly scarce, so large units of value can be represented by fairly small quantities of the stuff. It’s fairly soft, so you can make change with basic tools. It has a fairly low melting point, so you can consolidate change back into convenient larger chunks with only basic tools. It is chemically nonreactive to virtually everything in everyday life, so it won’t corrode away in storage. It has quite unusual properties, so constructing counterfeits is difficult.
  
  Yes, it’s fundamentally in the same slightly-absurd bucket as other venerated value-stores; but gold is a very good candidate for the part.
  - http://www.facebook.com/profile.php?id=1515015318 Missy Pants
    
    Thank you. So long as we all agree it is a hallucination, I’m fine with that. :)
nixiebunny

I suspect that a tiny drill to make a test hole in every gold bar they receive will become a standard test instrument in gold dealers’ work area.
- Ryan_T_H
  
  I doubt it. At $1600 an ounce figuring out what happens to the shavings becomes a huge deal.
- Ipo
  
  A steel nail. A drill removes material.
  - nixiebunny
    
    So the gold will be all dented instead of all holy. Make sense.
    Wasn’t coining the edges invented to prevent shaving of gold coins?
  - cdh1971
    
    Actually the nail is the business end of the device called the ‘Hot Needle of Inquiry.’
    - Ipo
      
      Gom jabbar.
arsphenamine

This has been known since 2004 when the Rothschilds announced they were withdrawing from commodity metals speculation.

Given 8 years to prepare for this, the precious metals industry could have created validation devices based on ultrasound (gold and tungsten have different stiffnesses) and/or magnetic permeability (i.e., a hand-held metal detector).

So here we are with presumed reputable sellers acting on faith or passing known frauds on to clients.
bird

he swapped the fake gold for smaller bars of gold. so when a customer “won’t accept cash” and offers to trade you gold for gold it didn’t set off any alarm bells?
el dueno

What? Do I have to drill all my gold bars now? I would think there would be a faster and more accurate way of assuring the value of my room-size stash of gold bars than drilling a hole in all the bars.
Charlie B

Paging Archimedes!
- http://pulse.yahoo.com/_OAUXAA362EXWLYVMPJOKLFB5JQ Incipient Madness
  
  I think the crooks were already thinking of Archimedes. That’s why they used tungsten, it’s so close to the density of gold that a simple density test work.
- bardfinn
  
  Wouldn’t help. Tungsten and gold have such similar densities – and thus, by definition, similar mass per volume – that the difference is well within the “allowance” for what is considered 24K gold, and would require extremely sensitive scales and volume measurements – which would fall flat if the tungsten were doped with a very small quantity of a heavier element.
Ted Stern

I have a 10 pound cylinder of tungsten on my desk. I got it 8 years ago from http://www.tungstenheavypowder.com/. It is not pure tungsten — they have a mix of about 95% tungsten (by weight) and 5% iron and nickel. The iron and nickel are fused to make the solid metal, which is more of a composite than an alloy. Nevertheless, it has a specific gravity close to 18, which is similar to that of gold.

I also have a one pound chunk of magnesium. The two metal chunks are approximately the same volume, but the tungsten cylinder has 10x the density. So they make a good comparison pair.
- fuzzyfuzzyfungus
  
  My understanding is that (unless you have an application that requires it as well as nontrivial cash) tungsten is frequently sintered from powder and then filled with something else to deal with the porosity rather than cast(since tungsten’s melting point is absurdly high) or machined (since it is hard and rather brittle).
- cdh1971
  
  Ted – normally I would simply click ‘like’ and leave it at that. But I do owe you a more verbose thanks for the tungstenheav…. link. Now I can investigate another direction with something that me, the amateur, hadn’t thought of…..so…Ted, thank-you.
cdh1971

This is a major problem with Gold-Pressed-Latinum (GPL) too. Of course, in systems that use GPL as currency, the gold used as a containment matrix (latinum is liquid) isn’t worth much, about as much as tungsten, maybe a little more all but the highest-end replicators cannot replicate elements identical to _natural_ gold. Replicated gold of course would fool any test known on this planet though.

Did I just write what I think I just wrote? Yes, I did. I won’t erase it though, as a way of behaviour-modification using self-shame.
_________________________
_________________________

I read an article in Popular Science a few years ago about how to create a difficult to detect counterfeit gold bar – the standard size stored in places like NYC vaults, Zurich, Fort Knox and etcetera. It’s called the ”London good delivery bar” and according to the article weighs 400 troy ounces, or about 33 lbs.

The bar itself is a marvel and actually costs about $50,000 (2008 price) to make, most of the cost being the actual gold used to make it.

Supposedly it would pass the xray fluoresence test.

I found the link to the online version of the article. Here it is:

http://www.popsci.com/diy/article/2008-03/how-make-convincing-fake-gold-bars

Well worth the read. This article also discusses tungsten as the best bet for the average joe trying to make one of these. Depleted uranium is the first choice but difficult to find.
cdh1971

Diamond District gold dealer not detecting this or not immediately smelling a shtshur? I smell two of ‘em.

He only detected the fraud _well after_ the shvindeler had left. Well, everyone has an off-day, but, nevertheless…hmmm.

Yes, I know the guy has an Arabic derived name. So what?
Tetsubo Kanamono

Our wedding rings are made out of tungsten carbide. Gold is tacky.
http://www.jimdraws.com Thorzdad

That looks more like gold-pressed latinum.
plyx

I smell insurance fraud. Some of the quotes from Fadl in the link seem like they come from a bad liar over explaining.
noah django

“You know what a cartel is?”

http://farm5.static.flickr.com/4113/5177159829_a218d4848a.jpg
- cdh1971
  
  Yes, and Moo.
Sigmund_Jung

What’s the problem? Gold bars are just wrapped in plastic and are not actually used on anything. As long as you don’t dig your gold bars and find the tungsten, they will keep their imaginary value.
- cdh1971
  
  Kinda like most other currency, from wampum to U.S. Dollars to Euros to take-your-pick. ( I’ll take the white car in the attached pic, which has much, much more soul than the red one.)
  
  http://en.wikipedia.org/wiki/Fiat_money
  - Sigmund_Jung
    
    Yep, but at least other currencies don’t keep touting their “real value”. Gold is as make-believe as any paper.
    - cdh1971
      
      Yup! Agreed.
      
      Similar to diamonds, which are an even bigger, steaming pile of hocus-pocus.
http://twitter.com/cjporkchop cjporkchop

The forger could have at least left some chocolate in there along with the tungsten, so that the mark could have a little something sweet. :(
- beemoh
  
  Pretty much where I was going to go- imagine, after the disappointment of finding out that what you have isn’t gold, the further disappointment of finding out that it isn’t chocolate, either.
pjcamp

I’d blame it on Glen Beck but I don’t think he’s smart enough to figure out the density thing.
David Palmer

Speed of sound is considerably different in gold (3240 m/s) than in tungsten (5220).

If anybody wants me to check out their gold bars by this method, just ship them to me. I’ll send back the good ones, saving you shipping costs by disposing of the bad ones myself.
sam1148

Wait until finds those gold coins are chocolate.
Stan Rehm

It’s worth mentioning that the tungsten substitution can apparently be applied to gold coins as well as gold bars – a development more likely to affect the average upscale consumer:

http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here
http://plagmada.org Tim H

According to a Chinese company that makes fake gold like this:

“If you would like to distinguish gold-plated from real gold, here is a vey easy way: as we know, tungsten gold-plated product is just covered with a thin coat of gold. You can make some distilled water, take the one you would to test sharpening, and then put it into the distilled water, out of the distilled water for a while. If it is notgold-plated tungsten material, it will not change color. We think it is better for client to know how to distinguish gold-plated from the real gold first, then it will have a well knowledge about tungsten gold-plated material.”

http://www.tungsten-alloy.com/real-gold-gold-plated-distinguish.html
http://www.facebook.com/laroidion Laroi Dion Jackson Sr.

“Everythang glitter,…aint Gold”
GyroMagician

Thank you! Like all the best answers, it’s obvious once you know it. Maybe you should go into business, before the Germans start melting theirs?