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When one goes to buy gold they want real gold,
not some cheap substitute like a fake tungsten gold bar. There has been a lot
of rumor, neither credible nor verifiable sources, about
bars containing both gold, the Ancient Metal of Kings and tungsten,
the ‘heavy stone’.
Just like a $100 bill costs about $.04 to
produce leading to a profit of $99.96 from such unethical currency production
so likewise with the price of gold at $18,000 per pound and the price of
tungsten around $25 per pound there is, for the unscrupulous, an opportunity
for arbitrage.
GOLD PROPERTIES AND TUNGSTEN PROPERTIES
As Rayner Hesse observed on page 191 of Jewelry Making Through
History, with the Stamp Act of 1854 the purity of gold jewelry was reduced
and required to be hallmarked at 9k, 12k or 15k and so the search for gold
alternatives began. Within a few decades the House of Cartier had gone
international and Edward the VII named it the ‘Jeweler of Kings and
King of Jewelers’. Presently, many watches are being made with tungsten
carbide instead of gold because it is lightweight, takes a polish and is
scratch resistant.
Gold has a density of 19.30 grams per cubic
centimeter at room temprature and a liquid density
at the melting point of 1,947.5°F of 17.31 grams per cubic centimeter.
Tungsten has a density of 19.25 grams per cubic centimeter at room temprature and a liquid density of 17.6 grams per cubic
centimeter at the melting point of 6,192°F.
But despite being used for jewelry and having
similar densities gold, AU 79, and tungsten, W 74, are not the same element.
But a 400 ounce bar with 1/16″ gold surrounding a tungsten slug would
cost about $50,000 to make and would likely pass sound, feeling, chemical and weight tests along with an x-ray fluorescence
scan. On the other hand, the higher profit margin $500 bar using small
tungsten slugs with lead alloy would still pass a sound and feeling test but
would be slightly underweight and it is likely that neither a chemical test
nor a x-ray fluorescence test would be passed
because the gold coating would not be thick enough.
HOW TO DETECT A FAKE TUNGSTEN GOLD BAR
Detecting a high-quality fake tungsten gold
bar would be extremely difficult. It would likely require significant and
material alterations to the bar being tested and this would negatively affect
the marketability if its hallmark veracity were vindicated.
This is likely a reason why page Page 11 of the GLD prospectus states “Neither the
Trustee nor the Custodian independently confirms the fineness of the gold
allocated to the Trust in connection with the creation of a Basket
[issuances].”
Nevertheless, the truly determined and
experienced can ferret out whether there is tungsten contained in their gold
bars. In fact, some already have found tungsten in bars which purport to be
gold and this is how.
GOLD ALTERNATIVES
If one is concerned about the quality of their gold then the other precious metals like silver
and platinum are good alternatives with the silver prices and platinum prices
being strongly correlated with the gold price. One reason they are safer is
because both silver and platinum have industrial applications and are widely
consumed. The silver and platinum stock are rotated on a regular basis being
melted down and fashioned into cell phones, catalytic converters, etc. and so
the purity and integrity of the above ground stockpile is held to strict
account because of physical demand market forces.
CONCLUSION
There is plenty of profit motive for fraudulent gold bars that are stuffed with
tungsten. Imagine the pandemonium if the central banks not only had less than
half the gold they claim but if of the gold they have the majority of it is
filled with tungsten. Tungsten filled gold bars being ferreted out in Germany
is disturbing. This is just another example of why to buy platinum or silver.
DISCLOSURES: Long physical gold, silver and
platinum with no interest in the problematic SLV, Streettracks
Gold ETF Trust Shares or the platinum ETFs.
Trace Mayer
RuntoGold.com
Trace Mayer, J.D., holds a degree in Accounting from
Brigham Young University, a law degree from California Western School of Law
and studies the Austrian school of economics. He works as an entrepreneur,
investor, journalist and monetary scientist. He is a strong advocate of the
freedom of speech, a member of the Society of Professional Journalists and
the San Diego County Bar Association. He has appeared on ABC, NBC, BNN, many
radio shows and presented at many investment conferences throughout the
world.
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