Monday, January 25, 2010

Is that gold bar for real?

In a recent article, Doug Hornig, Senior Editor of Casey's Gold and Resource Report, discusses counterfeit gold coins and bars.

Gold is one of the heaviest metals, but also one of the softest. The old Wild West method of biting down on a gold coin to see if it is real is actually a pretty good test. "If you chomp down and shatter a tooth, it ain’t gold."

There's not enough of a profit margin for scam artists to bother counterfeiting bullion coins, Hornig says, but gold bars are a different story.
Fakes do show up in the market from time to time, and they’re hard to identify. Generally speaking, counterfeiters don’t bother with the smaller ones, which are stamped, numbered, and sealed. They concentrate on 1-kilogram or larger sizes. These are poured, rather than stamped, and can be easily adulterated or even hollowed out and filled with some other, cheaper metal.
Hornig offers some guidelines:
For coins, avoid “commemoratives.” Stick with universally recognized government bullion coins (American Eagle, Canadian Maple Leaf, Austrian Philharmonic, Australian Kangaroo, South African Krugerrand).

For small bars, purchase only those that carry the stamp of one of the known, trustworthy refiners, such as PAMP, Credit Suisse, or Johnson Matthey.

For bigger orders, 1 kilo and up, ask your dealer if he has an assay or is willing to have one done. If you want 100 ounces, insist on an assay or consider buying directly from the Comex, which means you’ll be assured of getting a good-delivery bar that has never left the circuit.
For bullion coins there are a few tests you can conduct at home, as well:
- Simply apply a magnet. Gold is non-magnetic, but if you’re unlucky enough to have gold-plated steel, it’ll stick.
- Size and weight are good measures. Get a scale calibrated to hundredths of a gram. If a bullion coin weighs light (or possibly heavy), it’s bogus.
- Since real gold has a higher specific gravity than other metals, you can test for that. Many Internet reference sites will tell you how.
- You could buy a commercial counterfeit detector. They aren’t cheap, but will quickly and easily perform the basic tests.

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