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Fake Gold?!

By: Jason Hommel, Silver Stock Report

-- Posted Wednesday, 21 October 2009 | Digg This ArticleDigg It! | | Source:

(As if paper gold is not fake enough; are they now faking the "physical" bars, too?!)

Gold does not rust or corrode.  A 24-karat gold coin can survive in the dirt, or under the sea for hundreds of years with no corrosion.

Why then, does James in the Bible say that certain men's gold will corrode?  Is the Bible wrong?  Or is some gold today fake gold?

James 5 (NIV)
 1 Now listen, you rich people, weep and wail because of the misery that is coming upon you. 2 Your wealth has rotted, and moths have eaten your clothes. 3 Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. 4 Look! The wages you failed to pay the workmen who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. 5 You have lived on earth in luxury and self-indulgence. You have fattened yourselves in the day of slaughter. 6 You have condemned and murdered innocent men, who were not opposing you. 

There was a rumor this week, from:

"In an Asian depository they've found “Good Delivery” bricks that had been gutted and filled with tungsten.

Soon, there will be xxxx hitting the fan all over place."

I call this a rumor, because there is no link to further information: no real details for this story, no named depository, no information on the weight or number of bars, no contact person listed, no refinery name listed for the bars, no name for the bank that delivered them, etc.  It will be interesting if more information comes out. 

This story was repeated in one other story:

But a google news search revealed nothing further for me.

GATA is covering this story at the Midas table at  You have to be a paid subscriber to follow along, or you can also sign up for a free two week subscription.

Midas mentions that tungsten sales exploded in the years 2002-2005, which suggests that it may have been used in quite a few gold bars.

I read at the Midas table at that you could test for tungsten filled gold bars, with an electrical resistivity test -- but it's not really true for us, practically speaking.

We assay and buy all kinds of gold from the public, and we encounter many "fakes" that the public just does not know if it's even gold or not.  So I asked my gold assayers if that was true.  I knew that we bought such electrical gold testing kits, and that we stopped using them, so I asked why.   They explained that they do not like the electrical resistivity test kits because if a piece of gold jewelry has a heavy 24 karat gold plating over it, then you cannot tell if the underlying material is 18 karat.  That's what I thought.  I know that's also true for silver, as electrical current moves on the surface, (for the most part).  Thus, I tend to think that if a gold electrical resistivity test could detect a tungsten filled gold bar, it would have to use an extremely high and powerful current, and have great contact points with the gold, and be a very sensitive instrument.

The only practical and relatively foolproof way to test for gold's purity is to cut into gold jewelry with a file, and test it with acid, because true gold will not corrode, or dissolve, with a certain strength of acid.  The acids will bubble under the microscope if they encounter impurities such as copper in 22 karat gold. (Very strong acids, such as cyanide, will dissolve gold.) 

The other foolproof way to test gold, of course, is to melt it all down.  This reminds me of Revelation, which says to buy gold tried in the fire, which is good, practical advice for our day and age.

Revelation 3:18
18 I counsel you to buy from me gold refined in the fire, so you can become rich; and white clothes to wear, so you can cover your shameful nakedness; and salve to put on your eyes, so you can see.

My gold buyers have recently had one customer attempt to sell us a 50 gram Credit Suisse gold bar, but it only weighed 30 grams!  So we didn't buy it! 

The problem with tungsten is that the specific gravity is very close to that of gold, so close, that a tungsten filled gold bar would be much harder to detect by weight than a lead filled bar, such as we may have encountered.  Gold's density is 19.3 grams per cubic centimeter and Tungsten is 19.25.  See:

Lead is just over 1/2 the weight of gold by volume, at only 11.34, which is closer to silver, at 10.49.

A few years ago, there were true reports of "magnetically attractive silver" (steel, or steel-filled) fake silver jewelry being sold.  I found several stores that were selling as "silver jewelry", chains that were attracted to magnets, and thus, not real silver, but fake silver.  That story was true, but seemed to have died, as so few people seemed to care.  For example, gold is still so cheap, that some forms of gold ear-rings, such as 1.2 grams, at 14 karat, sell for $25 a pair for the "gold content", which is a similar enough price for any sort of costume jewelry.

But gold bars are a bit more important, and buyers of 400 oz. gold bars tend to have more power, so if this story of tungsten filled gold bars is true, I'm sure we will hear further details, as time goes on.

Will this story make gold prices move down, as people may begin to distrust gold?  Probably not.  It's not much of a story so far.  If anything, if this is true, it's one more reason to distrust the paper money establishment banks who may be "holding gold for you", if the LBMA gold is not good.  It should encourage people to take delivery of real gold.

As a practical application, many of our customers will want to know, "How do we know our gold coins are good?".  First of all, fake gold coins would be much, much harder to manufacture than tungsten-filled 400 oz. bars. 

We keep several examples of "fake" coins in our shops, so customers can easily see the difference.  A gold plated coin is usually silver underneath, and so, it weighs much less, nearly half the weight, and is instantly obvious. 

A great example is to hold a silver Eagle, and a gold Eagle, side by side, to see the relative density and smaller size of the gold Eagle.

Gold plated coins also are very smooth, as the gold plating tends to fill in the crevasses and creases and it tends to round out the edges so that the coin is not crisp or sharp feeling.

The other way we have tested gold coins and silver bars is that we have cut samples in half.  You can then see the material is consistent all the way through.  That's a good way to test the reliability of a refiner.

We have heard reports of fake Maple leaf coins being attempted to be sold to jewelry shops, but none were good enough to fool the jeweler, so there must have been something obviously wrong with them.  


Good news.  Since I'm a business owner with a real business address in my community, with the founding of the JH MINT and Coin Shop, see, I was interviewed by the local newspaper this morning for about 30 minutes about the gold price and where gold prices are going.

I was able to point out that the overall general trend of the gold market is one where prices are headed up, and going much further, due to the failing price suppression and manipulation of the gold price by bullion banks and central banks who have been leasing gold into the marketplace, and struggling to deliver gold into their many paper contracts, which suppress the price. 

We often hear that the IMF wants to sell 400 tonnes of gold, we have heard that every year for the last ten years, and no gold is sold.  It's merely the threat of gold sales that is used to try to cap all price rallies.  Also, they dump many paper contracts to deliver gold, onto the paper futures markets, to manipulate the price.  Recently, the number of these paper contracts has exploded as gold has crossed the $1000/oz. mark.  They can more easily create paper contracts to deliver gold, than actually obtain and deliver real gold.

We rarely hear how China, who has over $2100 billion in foreign exchange reserves, wants to buy $80 billion of gold (less than 5% of their holdings) for "prudent diversification" purposes, which would be 80 million oz. of gold.  I explained that to understand the gold market, you need to know how many troy ounces are in a tonne, which is 32,151 oz.  So that means that China wants to buy 2500 tonnes of gold, which is all the gold being produced annually by all the world gold mines.

I explained that there are circumstantial reports complied by GATA that suggest that Germany has swapped 3000 tonnes of gold with the Unites States, to help suppress gold prices, but that now Germany wants their gold back!

I was able to explain that I feel that gold will probably go up by at least 30% per year for the next five years, or more if or as manipulations continue to fail (and they are in the process of failing), which will lead to gold prices of at least $4000/oz by five years from now. 

I explained that all the gold produced in all the world is 150,000 tonnes, or about 5 billion ounces, worth about $5 trillion.  Yet not nearly that much gold trades annually.  Gold prices, like anything, are set by supply and demand, and new supply is the tiny gold mine production of 2500 tonnes per year, worth about $80 billion.

The world bond market, at maybe $50 trillion, or $50,000 billion, ought to start flowing into the gold market, since when gold is going up by 30%, there really is no real reason to hold bonds anymore.

I explained that the Dow to Gold ratio, historically, suggests that the ratio will return to a 1 to 1 ratio, suggesting that the dow will hit 3000 as gold hits $3000, or maybe they will both be 10,000, or even 30,000. 

When stocks and bonds are looked at through the prism of gold, stocks have lost 75% of their value, while remaining at 10,000 for ten years, while gold has gone up 4 fold, from $250 to over $1000. 

Our town is an historic gold mining town, Grass Valley, California.  The reporter's story will be about the 16 to 1 gold mine, and local efforts to revive the local Idaho-Maryland mine. 

I asked her why such facts about the gold market were not common knowledge among reporters, since the job of reporters is supposedly to be as a watchdog to excessive government money printing.  I suggested to the reporter that her editors might try to kill the story, or at least, downplay the bullish story for gold, and I asked her to please let me know if that happens.  We'll see.

Fortunately, I'll at least be able to present the bullish case for gold and silver to my home community through continued local advertising. 


I strongly advise you to get real gold and silver, at anywhere near today's prices, while you still can.


Jason Hommel

In case you miss an email, check the archives:

-- Posted Wednesday, 21 October 2009 | Digg This Article | Source:


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