I had just finished a walking tour of the Royal Canadian Mint when I saw it. Right there, out in the open, was a 400-ounce bar of pure gold.
It was chained to a display table and kept safe by an armed guard. At the time, in 2005, the bar was worth $220,000.
Today, the same bar is worth $667,700. In just seven years, gold prices have jumped by 203%.
But it's not the eternal fascination with gold that has boosted the price. With growing levels of worldwide uncertainties, mounting inflation risks and government distrust, people are clamoring for gold primarily as insurance.
According to the World Gold Council, 2011 saw gold bars and coins reach nearly $77 billion in sales, versus 2002's $3.5 billion. And in November alone, the U.S. Mint's sales of the popular American Eagle coins jumped 131% in the wake of the election.
With the market for gold growing at a feverish pace, it's now more important than ever to know that your gold is the real deal-especially with gold prices looking to break through the $2,000 mark in the new year.
Here's why...
Gold counterfeiting is nothing new. In fact, just recently there were reports of fake gold bars from China turning up in New York. Instead of gold, their centers were stuffed with tungsten.
But rest assured there are a number of methods you can use to mitigate the risks of ending up with counterfeit gold. Some are simple, quick and inexpensive. Others are more elaborate, detailed, and not so readily accessible.
Here are seven ways to find out if the gold you own is real:
It was chained to a display table and kept safe by an armed guard. At the time, in 2005, the bar was worth $220,000.
Today, the same bar is worth $667,700. In just seven years, gold prices have jumped by 203%.
But it's not the eternal fascination with gold that has boosted the price. With growing levels of worldwide uncertainties, mounting inflation risks and government distrust, people are clamoring for gold primarily as insurance.
According to the World Gold Council, 2011 saw gold bars and coins reach nearly $77 billion in sales, versus 2002's $3.5 billion. And in November alone, the U.S. Mint's sales of the popular American Eagle coins jumped 131% in the wake of the election.
With the market for gold growing at a feverish pace, it's now more important than ever to know that your gold is the real deal-especially with gold prices looking to break through the $2,000 mark in the new year.
Here's why...
Gold counterfeiting is nothing new. In fact, just recently there were reports of fake gold bars from China turning up in New York. Instead of gold, their centers were stuffed with tungsten.
But rest assured there are a number of methods you can use to mitigate the risks of ending up with counterfeit gold. Some are simple, quick and inexpensive. Others are more elaborate, detailed, and not so readily accessible.
Here are seven ways to find out if the gold you own is real:
Fake Gold Test #1: Size
Whether we're talking about coins, wafers, or bars, the producers of these items usually have very exacting standards. So a little research goes a long way to making sure you get what you expect.Find out what the true dimensions of the item should be, then compare them to what you have.
To do this, buy yourself a good quality pair of calipers so that you can measure the diameter, thickness or other dimension of your gold item very precisely.
Gold is a very dense metal, so some counterfeiters may make a coin in a wider diameter, in order to compensate for a less dense metal. If you compare gold to iron, it takes twice the volume of iron to equal the same weight of gold.
Plating other metals with gold still allows them to match the proper weight, but the size would be off. The difference could be very minor, but if you know what to look for, you can spot the fake.
Fake Gold Test #2: Magnetic
Gold is not magnetic. So if it sticks, your gold is fake. But to do this, you'll need a stronger than average magnet. The kind available from a specialized hardware store should do it.Keep in mind that counterfeiters obviously know this too. So they'll typically use metals that aren't magnetic to avoid this type of detection.
Just don't use this test alone.
Fake Gold Test #3: Weight
Obviously, one true and tested way of being sure you get what you ordered is by quantity. And weight is a great way of checking.Get yourself a good quality, precise scale. Then, based on the stated weight on your coin, wafer or bar, it should match up perfectly.
Keep in mind though, that gold is weighed in troy ounces. One troy ounce is equal to about 1.09714 "avoirdupois" ounces, which is the normal 1 ounce measurement we use in everyday life.
Fake Gold Test #4: Visual
Knowing what you're looking for will certainly help here. It's a learned skill, but keep an eye out for anything that looks odd or abnormal.A decent, strong magnifying glass goes a long way to pinpoint oddities.
You can search for high quality images of your coin or bar, then compare that with what's in your hands. Be meticulous in your search for minute details, all of which must be spot on.
Gold coins are a good option for gold "investments." You see, counterfeiters will often (but not always), fake larger gold items because it's more worth their while. After all, if you're going to go through all of the painstaking trouble and risk, the payoff might as well be big.
The test methods I've described so far apply to pretty much any form of "investment" gold. But if you take the leap and acquire a larger-sized gold item, there are a few other tests that can be performed for veracity.
The truth is, anyone who owns gold in the form of a larger bar, say 10 ounces and up, ought to consider having it verified.
Fake Gold Test #5: Assay
One option is known as the fire assay test. This is typically used by gold explorers/miners who require absolute certainty that their drilled samples are the real thing.Fire assays are an ancient method. They are the most widely used and considered the most reliable. The downside is that it involves drilling into the gold bar to provide at least ½ gram (0.2 ounce) to be tested. Some feel removing even a small quantity of the bar will take away from its integrity. But some gold bullion dealers, for their own assurance, will decide to cut your bar if you've agreed to sell it to them.
Another downside with fire assays is that you're really only testing the small portion you've sent to the testers. So if there is a void or other metal in the center of the bar, the test won't find it.
Assay testers will usually take about three days and charge about $35 to test a gold sample. They'll also provide an official signed report with the results.
Fake Gold Test #6: X-ray
X-ray testers are another option to check your gold. Jewelers will sometimes use these to test any gold they buy.The tester quickly performs chemistry analysis to determine what elements are present in the gold. They also can tell the purity and fineness of the metal.
X-ray testing does have a ±1% accuracy rating, so while minor, there is some chance for error. The other drawback is that it's essentially a surface test, so if there's a void or another material in the center of the bar or coin, then X-ray testing won't detect it.
On the plus side, it's nondestructive and non-intrusive, so the integrity of your gold won't be compromised. You'll know, at least, if the surface of the item is real gold.
Fake Gold Test #7: Ultrasound
Ultrasound testing is a way to "look into" your gold. It uses the same ultrasound technology familiar to all pregnant women.Essentially, this method scans the item, providing a digital image of the gold bar.
If there is an air gap or other material inside the gold bar, this will show up as a darker area on the screen's image.
This is expensive equipment, so it may be challenging to find someone who could provide testing services.
The advantage is that ultrasonic flaw detectors can actually "see" the inside of your bar, so the results provide a high degree of confidence in the bar's integrity. If you want to see exactly how this works, click here to view a short video demonstration.
Of course, there are other tests you can do to mitigate your risk of ending up with a fake. Probably the single most important thing you can do is to buy your gold from a reputable dealer.
While it sounds obvious, a little research can go a long way. Ask friends or acquaintances for referrals and check the website of a government mint for "partner" bullion dealers.
Also, consider buying from dealers that offer a product guarantee, as well as a future promise to repurchase anything they previously sold to you.
Keep in mind, though, that the biggest counterfeiter of all is your own central bank. Since the 2008 crisis, the Federal Reserve has created trillions of dollars out of thin air.
So your best insurance against even more fiat money counterfeiting is to own some physical gold. Just be sure you know who you're buying from and what you're getting.
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Thanks for the tips , sorry, but they appear pretty useless to me, not helpful at all, too many considerations.
I concur.
Tungsten has been found to be the chioce metal in large bullion bars in recent yr.s some in our own depositories the one I know about were trace back to china. Ultrasound may be the best way if you can see into the bar/bullion these were big acourse not little but the man said the bigger the better if your going to risk getting caught. I know of no chinese offials that were held liable/prosecuted but it goverment to goverment and that part was above our knowledge of how thing turned out. WATCH OUT!!! my brothers
Thanks for this look see about Gold and buying Gold. I have for years bought all Gold from the U.S. Mint and then only Proof Gold coins. While in the Far East I saw some Gold bars that I'm sure were fake. they wanted a cheap price. To scarie to venture into buying their Gold with nothing to check it with. In gold we buy Proof coins and U, S. Mint Gold only. Thanks I will always remember what you have written for us to know about buying GOLD. Dr. McC
Prevention is the best medicine.
Be sure you are buying from a reliable source.
Google "Preservation of Wealth."
Buying Gold or Silver, to be on the sure side, purchase only from a chartered bank. You get a certificate with a serial number. This gives you reasonable assurance that the Gold is real. Secondly, if you wish to sell at a later time, you have no problem selling as it is certified. This is not a cheap way to buy Gold or Silver, but the sure way.
You left out a VERY sure test, which is as old as Archimedes and 'Archimedes' Principle'!! Weigh the gold item in air and then weigh it while submerged in (preferably distilled) water using the accurate scale you mentioned above.
To weigh it submerged, it must be suspended in the water from, say an alligator clip hung on a piece of silk thread. In order to get an accurate 'tare' weight of your suspension device, you must weigh said device with the same amount of it submerged in the water as when the gold is hanging from it in the water to be weighed.
The weight of the gold in air divided by the difference between the weight of the gold in air minus its weight when submerged in wtaer should be equeal to the specifice gravity of gold to at least one or two decimal places (depending on the accuracy of your scale). If this is not so, something is 'fishy' !!
Archimedes originally developed his 'principle' and the above described test procedure so as to be able to determine for a king (who was suspicious) whether a jeweler had cheated the king when making a gold crown—without destroying the crown. As the story goes, Archimedes determined that the core of the crown was, in fact, silver–and the jeweler ended up executed !!
The story has it that Archimedes had the idea for this method of testing while sitting in a bath–and shouted "Eureka!!" when it came to him.
Greg
Peter,
You state that China gold which has reached New York is actually tungsten plated with gold. Months ago, I read that the reverse is true; gold bars from the U.S. was tungsten plated with gold.
Perhaps China shipped it back! And why shouldn't they?
Derek Blair, Tampa.
Well said Derek.
Don't you just love the way America blames just about everything on China?
US = Always looking for that scapegoat! Sickening.
There was a company called China Tungsten Online that openly advertised fake gold coins. Don't know if it is still there but they said they ship all over the world. Google it.
It was as recently as October 2009 "China received a shipment of gold bars. Gold is regularly exchanges between countries to pay debts and to settle the so-called balance of trade. Most gold is exchanged and stored in vaults under the supervision of a special organization based in London, the London Bullion Market Association (or LBMA). When the shipment was received, the Chinese government asked that special tests be performed to guarantee the purity and weight of the gold bars. In this test, four small holed are drilled into the gold bars and the metal is then analyzed.
Officials were shocked to learn that the bars were fake. They contained cores of tungsten with only a outer coating of real gold. What's more, these gold bars, containing serial numbers for tracking, originated in the US and had been stored in Fort Knox for years. There were reportedly between 5,600 to 5,700 bars, weighing 400 oz. each, in the shipment!"
The biggest worry is use of tungsten. Of all dense metals, tungsten is the only one with a density comparable to gold (they are the same… 19.3 gm/cm3), which doesn't cost much. Tungsten runs $15 – $20 / lb ($1-2 / troy oz). The best way to test against tungsten-plated gold objects, without having to damage them by drilling, is to have them ultrasonically inspected. The interface between the two metals will reflect some of the waves and thus show up as a boundary line between them. This works if the counterfeit is a tungsten blank that is coated or plated with gold or gold-based alloy. The counterfeiter could try to melt the two metals and cast them as one solid object to avoid this type of detection, but that is extremely difficult First, tungesten melts at 3422 C (about 6200 F), which requires very specialized equipment to produce safely. Second, gold and tungsten are probably not soluble in each other. I can't find a Au-W phase diagram, but one can estimate its properties by comparing elements from the same group as W (Mo, Cr) with those from the same group as Au (Ag, Cu). The Cr-Ag, Cr-Cu, Mo-Ni, and Mo-Pt phase diagrams show near-zero solubility and numerous complex intermetallic phases. A gold-tungsten alloy would be very hard to make, very hard to cast, and would probably tend to develop a lot of internal cracks during soldification (which cracks would show up on an ultrasonic test).
Very good, Bill. I picked up an ultrasonic thickness guage for under $100, complete with a bottle of glycerine for the transducers. When I buy, the guage goes with me.
buy silver
1. too cheap to be worthwhile to dilute
2. more potential to raise in value
3. easier to sell in small quantities (trade 1oz. for bread at Super Value)
4. more potential to raise in value
5. more recognizable.
6. more potential to raise in value
7. cheaper to buy
8. more potential to raise in value
9. easier to buy
10 did I mention–MORE POTENTIAL TO RAISE IN VALUE?
None of the above! The best way is both inexpensive and non-destructive. By using an Ultrasonic Thickness Gauge, the apparent thickness can be compared to the actual thickness. Any variation means your gold bar may be salted with tungsten. The method works because although tungsten and gold have nearly identical mass densities, the velocity of sound propagation within them is very different. Have a look at http://about.ag/UltrasonicThicknessGauge.htm
Another possiblity is measurement of resistance of the item.
Tungsten has more than twice the specific resistivity of gold.
If you were to compare the electrical resistance of two physically identical items, one of pure gold and one containing significant amounts of tungsten, you would find the resistance of the adulterated item to be higher.
Coins could be tested this way also, comparing a know good item to the questionable one
One very sensitive way to do this, if you have the gold item, is in a bridge circuit which is capable of detecting even very small differences in resistance.
If the adulterating metal were silver or copper, which have lower specific resistance than gold,
the measurement would show too low a resistance.
I have not heard of this method before, but I am sure some other electrical engineer has thought of it .
.
It is true with the Fiscal Cliff, over or under, the bottom line is that the U.S. stocks will surely take a tumble. (Why this rise of 300 points is what funny after so called the agreement in the Senate)
You recommend that one should be careful to pick sound companies with good dividend. Now even sound companies will be taking a beating on price too. Some have suggested that one should look into MLPs (stocks that are not subjected to taxes like other companies). Even so there are so many MLPs, any suggestion as to which are safe and sound to buy?
Gold is used for insurance purpose also.And it is a good choice to use it as a insurance.I like your blog and its informative.
Bill and Robert good idea. To the rest that at least kept on subject or had something of positive Bravo. To some first do"nt kill the messinger,stay on the subject not who"s finger is pointed where ,you have 8 fingers and two opposable phalanges call thumbs use them to help each other out.
I have an ornament in gold ? it is an elephant with green eyes ,;on the back there are little gold arrows ,toothpicks ,or for ouer doeuvers ? how's that for spelling . It is fairly heavy for such an animal . It was made in England over 20 years ago . ? Testing ,one ,two ,three , ? Thank you for all the info here ,verty educational for an old man ,78 . I have stocks in Natural resources ,including Gold , and Silver ; Mostly in Canada , and one Diamond Mine.
Just do what the Chinese did in the late 19th Century, put chop marks on the bar. If you are buying the bar then it doesn't matter, and if it is fake then you will not buy it.
If the bar is real then the gold will deform easily if it is pure gold and not so if it is tungsten plated. The chop will cut through the thin layer of plating when using a heavy hammer on the punch. A chisel will do fine in place of the chop.
Years ago I worked with a gentleman who had lived through the turmoil of prewar time Germany.
Gold coins and diamonds (precious stones) were the method of payment for services or favours. Large gold and silver bars even though more economic to produce were not the financial vehicle of choice. They were too big and too expensive for the average transaction. Gold and silver coins were a more practicable way to pay for what was required.
Also they used ordinary run of the mill gold and silver coins not coins most USA investors seem to want i.e. mint graded etc. These coins only have a value during times of plenty where they have a certain uniqueness. In hard times all that matters is the gold or silver scrap value nothing else. A pretty coin has the same value as an ugly one of the same material and weight.
if could have all my social security and have my property and school tax lowered it sure would help
good luck to all
John Wallace
Strange that nobody has yet mentioned this simple test, at least for wafers or coins.
Test unknown items against a known coin or wafer that you bring to the negotiations, by dropping each on a hard surface. The real gold should make a lower sound than a tungsten-core coin which will ring higher. If still unsure, try the Chinese 'chop' method as mentioned earlier. At least it doesn't remove any material from the item like drilling does.
Caveat from 30 years ago: Beware ships-mates from Odessa carrying coins of the Czars.
Good luck,
Ed Ertl