Posted on 12/02/2010 5:07:12 AM PST by DeaconBenjamin
HONG KONG (AFP) – Hong Kong's myriad jewellers and pawn shops have been hammered by a gold scam after unwittingly buying hundreds of ounces of bogus bullion, a report said Thursday.
The Financial Times described the swindle as "one of the most sophisticated scams to hit the Chinese territory's gold market in decades", and comes as the price of gold sits around record highs around 1,400 US dollars an ounce.
"It's a very good fake," Haywood Cheung, president of the Chinese Gold & Silver Exchange Society, Hong Kong,s gold exchange, told the newspaper.
Cheung told the FT that jewellers and pawn shops in the gold-mad city have discovered at least 200 ounces of fake bullion -- worth about 280,000 US dollars -- so far this year.
But he estimated that 10 times that figure could be making its way through the city's retail market, the paper said.
Among the fakes was a specimen with pure gold coating that masked a complex alloy with similar properties to the precious metal, suggesting fraudsters used sophisticated techniques and equipment, according to the report.
The fakes are difficult to detect by sight or touch, and are usually revealed by high-tech tests involving high temperatures and chemicals, the report said.
The Luk Fook Group, one of the city's biggest jewellers, was also tricked into buying almost 12,000 US dollars worth of fake gold until it discovered the scam and alerted its retail stores, the paper said.
"This was the biggest hit ever," Paul Law, the company's executive director, told the FT.
The scam targeted the sale of scrap gold to jewellers, not the bigger market for gold bars which is more rigorously controlled, the paper said.
(Excerpt) Read more at news.yahoo.com ...
Roger that, numismatic gold is usually encased in a thick plastic container to prevent just such an event from happening.
My bullion coins were minted a hundred years ago and were actually carried around in someones pocket so the wear and scratch marks are readily apparent. Go ahead, bite one, hell cut it in half if you want to, nothing in there but pure gold.
The Norks have been masters of counterfeit cash for decades, and the magnitude of this suggests that there could be some kind of State sponsorship behind this. Making an alloy that has similar properties to gold, and using it to make a false core slug is pretty sophisticated crime, and right up the ally of the Kim Dynasty.
‘worth about 280,000 FAKE US dollars’
Drill baby drill. It’s worth it to determine exactly how much gold we have.
Also, if we (Clinton) salted the gold we sold, that need to determine that and set it straight.
Wake up and educate yourself to the realities of this world...
http://www.popsci.com/diy/article/2008-03/how-make-convincing-fake-gold-bars
http://news.goldseek.com/GoldSeek/1264196160.php master class dictatorship..
http://news.goldseek.com/GoldSeek/1264196160.php crossroads
Gold Scams Shortchange Investors
Sun, Jan 3, 2010
Feature Article, Gold Articles
By Kishori Krishnan Exclusive To Gold Investing News
Every gold bug would cringe at this. Fraudulent games have expanded in the gold market. There are toxic bonds and phony gold bars. What does one rely on?
Several conspiracy theories abound about the massive gold-fraud orchestrated by central banks, and the fact that the US Federal Reserve allowed gold to trade higher and the dollar to fall lower.
Then there was news of the peddling of tungsten gold bars. The caper was finally exposed, but who created the bars and sold them? And to what purpose?
It is a scandal that is really an afterthought to the massive physical buying in the marketplace, but that is by far the last of the frauds.
Speculators are postulating that members of The London Bullion Market Association (LBMA) have oversold their inventory to investors. Other’s claim that financial instruments called ETF’s, of gold and silver, do not have the metals in inventory to cover what has been bought by investors.
As the world’s second-largest exchange-traded fund, and sixth-largest holder of gold bullion, the GLD gold ETF is considered the most powerful force in the global gold market.
With reports that the GLD “was created and run by untrustworthy instititions”, Michael Pennington explains: “The gold and silver ETFs were created by such financial giants as JP Morgan and Barclay’s Bank that also serve as custodians and sub-custodians. These are the very firms that have been involved in the process of short selling gold and silver in huge quantities. That they would be involved in creating the ETFs had to be considered as most unlikely unless they had nefarious purposes.”
Reports later exposed how the Comex could legally use GLD shares from their exchange traded fund to satisfy short futures contracts in need of a buyer.
It is not just organizations, but even bullion companies are involved in the gold scandal. Remember the Canadian company Bre-X Minerals Ltd gold mountain? One fine day, it was there, and suddenly, it wasn’t.
Also, check out the news that JP Morgan has been “manipulating the gold market”.
As if that was not bad enough, there is fresh news that the the UN intends to mint gold and silver coins with their logo. That raises a moot point: Where did the gold come from for the UN to start minting its own coins? For sure, the UN doesn’t have an official budget to buy tonnes of gold on the open market.
And to sum it all, the Gold Anti-Trust Action Committee (GATA) is reported to have filed a suit against the US Federal Reserve Board on alleged gold price manipulation.
Hey, what is happening here? Are these just plain ol’ conspiracy theories or could any of them have a grain of truth?
One thing though is certain - it has happened before. No new phenomenon this, for investors have lost gold before.
Gold price
Some analysts maintain that the flight into gold, that was seen in the last quarter of 2009, has not been sparked by anticipation of inflation, but by a flight caused by a lack of confidence and trust in central banks.
If the US can strengthen its dollar, gold buyers will flee the market. And if other major governments have monetary problems they cannot be buyers of US Treasuries. They will have to be sellers of dollars.
That will drive the dollar lower, further reduce the demand for US funding, force the Fed to further monetize and create more inflation. That in turn might give gold a life of its own, and speculators fresh gist for their mills.
There are also other economic trends set to unfold in 2010. What about the complete collapse of the stock market, a possibility that always lingers in the shadows.
Stock prices trade far above their book value levels and at massive multipliers to cash and assets. One day, investors could realize that it is only their perception holding this investment structure up. If they quit believing, it may cease to exist. And it would all come crashing down like a pack of cards.
Besides, the fact of the matter is the gold industry is “not in good shape”. To make matters worse, some bankers are encouraging dubious gold listings, under the guise of entrepreneurship.
The entry of many fly-by-night operators into other metals along with gold is also confusing investors, who could be turning to exchange-traded funds (ETFs) for the gold exposure pure gold companies have traditionally provided.
Also, the industry is bereft of the big dividend payouts of the base-metals industry. This, despite the high gold price. Many mines are still marginal even at the higher gold price, causing one leading fund manager to lament that some gold-miners are paying more in fees than in dividends.
On top of that, there has been a decrease in gold supply. There just exists no logic to support the significant growth in market capitalisation of the gold industry on world stock exchanges.
Artificial high?
Over the course of 2009, speculators have pumped the price of gold to a historic high of $1,227 per ounce. Its the classic short squeeze which moves prices up higher than they would ordinarily go without speculator’s actions. Multiply this by the entire world wide market and the net result is froth in the market.
What will be interesting to note is exactly how much real demand is out there for gold.
S&P has said that most global banks are still unsafe. That includes every bank in Japan, the US, Germany, Spain and Italy. FDIC said the number of banks on the problem list rose to 552 from 416. These same banks recently borrowed $11.7 trillion. Where did all the money go?
Another factor boosting the value of gold has been attributed to the rising interest in commodities from individual investors and investment funds alike. The recent decade has provide market speculators an increasingly easy way to trade gold, silver, oil, and even coffee and other commodities through chart trading platforms in their own home.
As the spot price of gold continues to rise, this creates a self-generating buzz of excitement which in turn leads to higher prices yet again. These are clearly artificial highs.
Don’t believe us? Think again.
Successful investment and even speculation in bullion requires total emotional neutrality. If one can’t suppress and ignore one’s own greed, fear, and every other emotion, one will never grow wealthy in the financial markets. Not only does this create enormous problems for conspiracy theorists, as their theories are so emotionally-charged, most investors tend to surrender their ability to think rationally.
Logic and common sense is thrown out the window. How far has yours travelled?
http://www.goldinvestingnews.com/2900/gold-scams-shortchange-investors.html
“Gold Finger - A New Take On Operation Grand Slam With A Tungsten Twist”
I’ve already reported on irregular physical gold settlements which occurred in London, England back in the first week of October, 2009. Specifically, these settlements involved the intermediation of at least one Central Bank [The Bank of England] to resolve allocated settlements on behalf of J.P. Morgan and Deutsche Bank – who DID NOT have the gold bullion that they had sold short and were contracted to deliver. At the same time I reported on two other unusual occurrences:
1] - irregularities in the publication of the gold ETF - GLD’s bar list from Sept. 25 – Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.
2] - reports of 400 oz. “good delivery” bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.
Why Tungsten?
If anyone were contemplating creating “fake” gold bars, tungsten [at roughly $10 per pound] would be the metal of choice since it has the exact same density as gold making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it.
Unfortunately, there are now more sordid details to report.
When the news of tungsten “salted” gold bars in Hong Kong first surfaced, many people who I am acquainted with automatically assumed that these bars were manufactured in China – because China is generally viewed as “the knock-off capital of the world”.
Here’s what I now understand really happened:
The amount of “salted tungsten” gold bars in question was allegedly between 5,600 and 5,700 – 400 oz – good delivery bars [roughly 60 metric tonnes].
This was apparently all highly orchestrated by an extremely well financed criminal operation.
Within mere hours of this scam being identified – Chinese officials had many of the perpetrators in custody.
And here’s what the Chinese allegedly uncovered:
Roughly 15 years ago – during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of “tungsten” bars shipped to Ft. Knox.
The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly “sold” into the international market.
Apparently, the global market is literally “stuffed full of 400 oz salted bars”.
Makes one wonder if the Indians were smart enough to assay their 200 tonne haul from the IMF?
A Slow Motion Train Wreck, Years in the Making
An obscure news item originally published in the N.Y. Post [written by Jennifer Anderson] in late Jan. 04 has always ‘stuck in my craw’:
DA investigating NYMEX executive - Manhattan, New York, district attorney’s office, Stuart Smith - Melting Pot - Brief Article – Feb. 2, 2004
A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney’s office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange’s markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney’s office also declined comment.
The offices of the Senior Vice President of Operations - NYMEX – is exactly where you would go to find the records [serial number and smelter of origin] for EVERY GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep these records. These precise records would show the lineage of all the physical gold settled on the exchange and hence “prove” that the amount of gold in question could not have possibly come from the U.S. mining operations – because the amounts in question coming from U.S. smelters would undoubtedly be vastly bigger than domestic mine production.
We never have found out what happened to poor ole Stuart Smith – after his offices were “raided” – he took administrative leave from the NYMEX and he has never been heard from since. Amazingly [or perhaps not], there never was any follow up on in the media on the original story as well as ZERO developments ever stemming from D.A. Morgenthau’s office who executed the search warrant.
Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations then takes leave - all for nothing?
These revelations should provide a “new filter” through which Rothschild exiting the gold market back in 2004 begins to make a little more sense:
“LONDON, April 14, 2004 (Reuters) - NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.”
Interestingly, GATA’s Bill Murphy speculated about this back in 2004;
“Why is Rothschild leaving the gold business at this time my colleagues and I conjectured today? Just a guess on my part, but suspect:”
*SOMETHING IS AMISS. THEY KNOW A BIG GOLD SCANDAL IS COMING AND THEY WANT NO PART OF IT. …”
“ROTHSCHILD WANTS OUT BEFORE THE PROVERBIAL “S” HITS THE FAN.” BILL MURPHY, LEMETROPOLE, 4-18-2004
Coincidentally [or perhaps, not?], GLD Began Trading 11/12/2004
In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool / catch-all, slush-fund and a likely destination for many of these “salted tungsten bars” where they would never see the light of day – hidden behind the following legalese “shield” from the law:
Excerpt from the GLD prospectus on page 11:
http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf
Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.
The Fed Has Already Been Caught Lying
Liberty Coin’s Patrick Heller recently wrote,
Earlier this year, the Gold Anti-Trust Action Committee (GATA), filed a second Freedom of Information Act (FOIA) request with the Federal Reserve System for documents from 1990 to date having to do with gold swaps, gold swapped, or proposed gold swaps.
On Aug. 5, The Federal Reserve responded to this FOIA request by adding two more documents to those disclosed to GATA in April 2008 from the earlier FOIA request. These documents totaled 173 pages, many parts of which were redacted (covered up to omit sections of text). The Fed’s response also noted that there were 137 pages of documents not disclosed that were alleged to be exempt from disclosure.
GATA appealed this determination on Aug. 20. The appeal asked for more information to substantiate the legitimacy of the claimed exemptions from disclosure and an explanation on why some documents, such as one posted on the Federal Reserve Web site that discusses gold swaps, were not included in the Aug. 5 document release.
In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA’s appeal. The entire text of this letter can be examined at http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf.
The first paragraph on the third page is the most revealing. Warsh wrote, “In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.”
This paragraph will likely be one of the most important news stories of the year.
Though not stated in plain English, this paragraph is an admission that the Fed has in the past and may now be engaged in trading gold swaps. Warsh’s letter contradicts previous Fed statements to GATA denying that it ever engaged in gold swaps during the time period between Jan. 1, 1990 and the present.
[Perhaps most importantly], this was GATA’s second FOIA request to the Federal Reserve on the issue of gold swaps. The 173 pages of documents received for the 2009 FOIA request all pre-dated the 2007 FOIA request, which means they should have been released in the response to the earlier FOIA request. This establishes a likelihood that the Federal Reserve has failed to adequately search or disclose relevant documents. Further, the Fed response admitted that it had copies of relevant records that originally appeared on the Treasury Department Web site, but failed to include them in its response.
Now that Federal Reserve governor Warsh has admitted that the Fed has lied in the past about the Fed’s involvement with gold. It should now be very clear to everyone why the Fed is lying and the true nature of what they are hiding / withholding.
On Doing God’s Work
An important footnote to consider is the inter-twined-ness of the U.S. Federal Reserve and the U.S. Treasury [can anyone really tell them apart?] as well as this duopoly’s two principal agents – J.P. Morgan-Chase and Goldman Sachs. When one truly grasps the nature of these highly conflicted relationships it gives a fuller meaning to words recently uttered by Goldman head, Lloyd Blankfein, who claimed,
“I’m doing god’s work”
Does this really mean that Mr. Blankfein believes that the Federal Reserve is god? You can judge for yourself. While the Fed prints money like no one else could - except god almighty himself [or Gideon Gono, perhaps?] – I really doubt that was the intent back in 1864, when the U.S. adopted “In God We Trust” as their official motto.
And that’s my two cents worth for today.
Got [real] physical gold yet?
http://news.goldseek.com/GoldSeek/1258049769.php
By the way, the same people who are refusing an audit of our gold are the same fiat-currency lords who keep saying gold is irrelevant.
If it’s irrelevant, why not determine how much we have and whether or not it is pure?
One method is to measure heat conduction rates. For coins, they can also be "rung." The elastic modulus of gold is substantially different from that of tungsten (the equal density adulterant), and will give a different sound (lower pitch).
Many bullion coins are 99.9% gold - they’re soft. I know of jewelers who buy Canadian maple leafs and pound them into leaf, and rings and other jewelry.
I prefer the common date 100 year old coins as well, they have historical and a bit of numismatic value, and can always be melted as the need arises.
I was gonna be funny back, but this one might actually have something behind it besides BS. Not all of the gold, but some of it.
Among the fakes was a specimen with pure gold coating that masked a complex alloy with similar properties to the precious metal...
Fakes should be easily detected with $10 calipers (to measure coin diameter and thickness) and a $10 scale.
It’s not easy to audit... Drilling is destructive and time consuming.
Maybe we can pay off our debt to China using these fake American silver dollars (made in China) that are flooding the coin market?
I damn near had a heart attack last night after buying an 1893-S for $25.00! Book value in G-4 grade (nearly smooth) condition is $2500. I graded mine between AU-58 & MS-60 (nearly perfect)...book value $50,000 - $90,000. With this group were 5 other dollar coins, to include the 1796 small eagle trade dollar. The rest were also key collector dates, like the 1879-CC. Thankfully, I only paid $25 each, which was less than spot price for scrap silver yesterday.
Mrs. panax was already picking out curtains for our new motor home while I searched the net for a buyer for our treasure. That’s when I found the page linked below. Oh well, it was exciting while it lasted and very educational. The coins are nearly perfect in every way, to include that well-known “silver ring” sound.
I’ll be testing them for silver content (if any) this morning. I buy scrap gold/silver coins, jewelry etc. and never questioned for a second that they were NOT the genuine article. They were that good!
http://www.silver-coins.org/counterfeit_dollars.html
How about ultrasound?
There are simple and reliable tools to verify common gold coins, which I have never heard of being credibly faked (i.e. Tungsten, or any other method undetectable to this simple device):
http://www.fisch.co.za/principle.htm
93s for $25, that’s pretty cool! Mine is an F-12 in a PCGS slab, probably not faked since PCGS mailed it to my friend. But apparantly there are fake slabs as well.
I didn’t even check the dates before buying them. I have a deal with my friend (who owns a small refinery) and have bought many old American silver coins at spot price, so I didn’t even question the dates or condition.
I’ll be calling to alert him after I check the purity. He also got an Engelhard bar from the same guy that I presume will be also a counterfeit.
Check this out.
http://www.bullionstacker.com/viewtopic.php?f=32&p=38586
I purposely bought a fake trade dollar just to see what it looked like. Some sort of nonmagnetic pot metal which was a little on the light side. The strike was pretty good although the die obviously came from a worn coin. The luster was terrible, didn’t look right and obviously didn’t feel right. But it would be pretty scary if they stamped the coin from real silver and “forgot” to mark it as replica on the back.
I once saw fake soybeans in China.
They were little balls of mud, with some kind of yellow powder applied to the outside.
It amazed me that it was worth someone’s time to actually create these out of mud, rather than simply go out and grow the damn things.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.