A Revisit to the Fake Gold Plated Tungsten Story
Commodities / Gold and Silver 2010 Mar 11, 2010 - 03:54 PM GMTBy: Robert_Bradshaw
The gold-plated, tungsten-filled bars story hasn’t gone away. Not only has it continued to pop up in various gold and hard-money, investment-advisory letters; but even the populous press publishers, like the American Free Press and Rense.com, have found it expedient to publish material on it as well.
Recently, rense.com had it in an article on “More Tungsten Fake Gold Bars Found” (from Coin Update News of Mar 2, 2010, by Patrick Heller). This one said that W. C. Heraeus (a metals refinery in Hanau, Germany) found a tungsten, gold-plated, 500-gram bar it received from a bank. A Heraeus employee was suspicious of the bar. To check out his suspicions, he cut it in two. It was found to be tungsten with a gold plate. I would just add here that the find involved a 500-gram bar (reportedly 16.0755 troy ounces?) and not a 400-ounce bar. There is a considerable difference between the two.
The Coin news report repeated the rumor of fake, gold-plated, tungsten bars allegedly found in the Chinese central bank. The Coin story concluded that “there has been almost a total blackout on news coverage of this story.” Well, this charge can’t be laid to gold investor news sources and letters as numerous attempts continue to be made with regularity to try to validate and legitimize the original story that cropped up last fall in the vein of an alleged 1.3 to 1.5 million 400-ounce bars produced in the US to flood/fool various nations in the world.
The Take at Analysis-News.com
Www.analysis-news.com eventually weighed in on the question with some material on it on Dec 3, 2010 in the Goldsmiths 116, as published by www.goldseek.com, and in an article on Gold Plated Tungsten Bars, Yes or No?, as published by www.safehaven.com and www.marketoracle.co.uk. Once more, I feel compelled to weigh-in on the question because I fear the real issues are not being addressed and people are still being grossly misled.
The original story that first came to me was a sensational story that if true it would have rocked the whole political and economic structure of not only the United States but many other countries in the world. It was a fantastic story on the surface which would whet the appetite of gold and hard money publishers as well as the populist press. Frankly, I took it at once as a questionable rumor following another questionable rumor from the same source that some big gold buyer on COMEX had tried to take delivery on a futures contract and COMEX/short sellers could not deliver. I took both of these stories as being unsubstantiated, far-out rumors which I believed could lead to misinformation among honest people.
Sometime after this time frame, I had lunch one day with a broker in Spokane, Washington who had picked upon both of these stories. Almost all my luncheon guest could talk about was these two stories--as if they were true and how they were going to impact the investment world. I said nothing; except I wondered in my mind how anyone could be so entrapped into such unsubstantiated rumors of very questionable validity. But most of us can become so deceived that we actually come to fall for almost any incredible tale.
To Set the Record Straight
My reference to the question, as I had it at www.analysis-news.com, said the following: “The gold world has been ablaze for the last few weeks with a sensational story from fifteen years ago that the US government allegedly manufactured/bought some 1.3 to 1.5 million 400 oz, gold-plated, tungsten bars. Some 640,000 of these bars were allegedly stored at Fort Knox, and the balance was sold/shipped to central banks/other parties around the world.” Please note here that the issue in Germany was a 500-gram bar while the original US story was about 400-ounce bars. There is a considerable difference between the two.
Also, please note in this original story/rumor, the essence was that the US government under Bill “Slick” Clinton had manufactured or bought some 1.3 to 1.5 million of these fake bars and had flooded some 800,000 of them to central banks and others around the world. If this story had substance, it indeed would be sensational to potentially upset the entire monetary world.
Effectively, the story was trying to say that not only was there little or no US gold at Fort Knox, but the same conclusion might be arrived at with other central banks that had received this fake gold from the US. As proof, the story said that these US government bars had showed up at a (central?) bank in Hong Kong. It was too bad for the story, but there never was any evidence from any source to support the Hong Kong/central bank allegation. As far as I could tell, the Hong Kong thing was all pure and simple unsubstantiated rumor designed to support the 1.3 to 1.5 million bars story.
My articles on the tale were that it made no sense at all for the US government to be purposely dealing with these fake bars because the US government has no compulsion to ever let the American people know the true status of US gold. The government can tell us any lie; and it can’t be proven one way or the other.
As for as the US government shipping these fake bars to other central or commercial banks, I took it as being absurd because true experts and assayers working with gold around the world would spot it and cause much bad publicity for the US. I cited the case of fake bars sent from Ethiopia to South Africa. The story from Hanau, Germany would be another possible example worth noting and especially if the bar would have been 400 ounces instead of 500 grams. But this report proves nothing for the original story since it is impossible to compare 500 grams with 400 ounces.
I also noted that one Chinese company was in the business of making gold plated tungsten jewelry. This company and likely dozens of others around the world can put a gold shell around any type of tungsten or any other filler to fool the uninformed public. Of course, there could be fake, gold plated bars--with tungsten, lead, brass, iron, steel or anything else--to be used to swindle uninformed buyers. Although never proven or substantiated, it’s conceivable that a gold-plated, fake bar at one time or another did reach a bank in China. And while such subterfuges may fool most people--to include lay buyers--they would not easily fool jewelers and expert assayers at central banks. If one did sneak by the experts, it would be a rare one and nothing that would commonly happen.
Nadeem Walayat (at www.marketoracle.co.uk) raised the question to me in a note which asked what would be the purpose of these fake bars since they could not be exchanged among expert jewelers and central bank assayers?
Nadeem then shared a story from Reuters in the Dec 22, 1983 New York Times which reported on the arrest of five men in a hotel in Vienna, Austria. They had ten, fake, gold-plated, tungsten bars that they were evidently going to try to sell to unsuspecting buyers. These bars were stamped with numbers linking to some genuine gold bars stolen earlier (many of the real bars have identifying numbers evidently from mints to make it even more difficult to counterfeit and pass them).
My material at www.analysis-news.com related the case of the fake bars sent by Ethiopia to South Africa (which were of course spotted as fakes at once by the Central Bank of South Africa). And now, in the last month or so, we have had the above story from Germany that a gold refinery employee there was suspicious of an incoming gold bar and cut it open to find that it contained tungsten. Now, as a result of this incident, all kinds of gold advocates and populists are coming out that the original story/rumor was somehow true.
Back to the Original Story
The original story was not about passing fake gold jewelry or fake gold bars to fool uniformed, public buyers (which is always a possibility). Moreover, the original report was about 400-ounce bars and not 500-gram bars. Last, the original tale alleged that the US produced and stored some 640,000 bars of this stuff at Fort Knox and transferring another 800,000 bars or so to central banks and others around the world. This original story was really far out; though I admit that Clinton was a gross liar; and he and the US government were both fully capable of such dishonesty. I wouldn’t put anything past either of them.
Back on Oct 1, 2008, www.goldseek.com published the Goldsmiths XVII with a story citing the work of Edward Durrell and Peter Beter that questioned the presence of the alleged US gold supply at Fort Knox back in the 1970s. After this story came out on Oct 1, 2008, there was a surge of other articles (some from the same source of the later tungsten story) that the alleged gold in Fort Knox was not there, in fact. Frankly, I took it that the tungsten gold story was simply one more along the same line trying to prove that Fort Knox didn’t have the gold it was supposed to have (as I had broached earlier on Oct 1, 2008).
The original story about the US using and storing gold plated tungsten bars at Fort Knox and passing them off to central banks around the world has no merit whatsoever. Alternatively, could dishonest people try to pass gold-plated tungsten bars (or other mineral fillers) as being real to unsuspecting lay buyers? The answer here is whether a cat has got a tail or not. Yes, dishonest crooks could try to pass gold-plated tungsten, steal, brass, iron and you name it bars to unsuspecting buyers. I allowed this in my article on the subject at www.analysis-news.com.
I also told the movie story of the Maltese Falcon and how a lead copy of it was covered in black paint to try to make people think that under the paint one would find the gold falcon. Well, like Sidney Greenstreet immediately did (when he scraped off some of the paint to find out what was under the paint); I too would make some effort to verify any gold bar or gold jewelry I buy. It might not be so bad to be swindled with a small fake gold ring, but I would hate to be swindled with a large, 400-once, fake bar worth $400,000 on the market.
The question in this original tungsten story is not whether there has been or could be fake, gold-plated tungsten bars floating around in the world, in the hands of private persons; but correctly the story was actually about the US government producing some 1.3 to 1.5 million of these to store some 640,000 of them at Fort Knox and to distribute the remaining 800,000 or so of them to central banks around the world. This original story never had and still has no worthwhile merit. My take is that it was wrong and being passed out for reasons other than to inform and educate the public.
It boggles my mind how people can now latch onto a story that a refinery found a 500-gram, fake, gold-plated, tungsten bar and claim that that find in some way proves the validity of the original story about the US government and its alleged 640,000, 400-ounce, fake bars in Fort Knox and the remaining 800,000 or so 400-ounce bars being transferred to central banks around the world. It blows my mind on how in the world can people connect the two stories and say that they link or are the same.
The Bottom Line
Despite the bad information and confusion associated with the tungsten story, there are at least four other fall-outs over it which deserve mention—one positive and three negative. The good positive fact is that the huge publicity over this apparently false, original story provoked much follow-up in the gold media to cause buyers to at least acknowledge that they could be swindled by so-called gold sellers. This is a good thing, despite the conflict/inconsistency between the original story and the follow-up stories. Yes, gold fans like me need to take some positive steps to be sure that when I buy gold that I am buying the correct quantity and quality of gold.
But there are also at least three really bad negative features. The first big negative feature crops up from the advice of the Coin Update News with words to buy and hold gold coins, etc physically in one’s possession and checking them out when purchased. This sounds good; but it contrasts sharply by all would be purchasers of ETF gold and even investors in the Central Fund of Canada. Per the generated fear, the ETF and Central Fund of Canada could be stuck with large quantities of fake, gold-plated, tungsten bars. While there are negative features for both of these entities, I would suggest that they shouldn’t necessarily be tainted with the tungsten story.
In a second negative feature, this Coin position also contrasts shapely with what I have been saying for my own account for years. My take is to get my gold purchases out of this country completely. If I can buy it and inspect it here and then get it out—fine. But in many cases, I may find it difficult if not impossible to buy it here and get it out. Often I will find it more practical to buy it overseas and leave it there. But obviously, wherever I might buy some gold, I would insist that I obtain a valid authentication or insurance agreement protecting against it being a fraud. This is common sense and I believed in it long before the tungsten story surfaced.
For my part, I will gladly take some risks in buying gold from a good dependable source overseas in comparison with sitting on my duffs and facing the prospect of the state confiscating my gold in the US. And I don’t believe for a minute that buying gold and storing it in nearby Canada is a good proposition for me. I must hasten to say that when the Cabal strikes with confiscation, the arms of Big Brother will reach out to seize it in Canada, Britain, Australia and New Zealand as well as in the US.
There is still one more bad feature about the original gold-plated tungsten tale. I must suggest that it supports and plays directly into the hands of the Cabal manipulating the price of gold worldwide. There is no question about it whatsoever; many persons thinking about buying gold will now back off for fear that their purchases might be fakes.
This story has not been a good one for the gold business or gold advocates. If the original story could have simply opened the door for a need to authenticate or verify the legitimacy of purchased gold bars, jewelry and coins, it would have been good. But it didn’t. Its pitch was that the US had 640,000, 400-ounce bars in its vaults and had flooded the world with another 800,000 bars or so. This alleged 800,000 or so 400-ounce bars out in the world have put fear and doubt into the minds of potential gold buyers around the world. If I believed the original story, I would be very hesitant about buying gold.
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Robert Bradshaw is a retired CPA and editor of Analysis of News at www.Analysis-News.com.
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