Posted on 12/12/2012 7:00:26 AM PST by Renfield
Fool’s Gold? Deutsche Bank, China, and US embroiled in faking suspicions
On and off for over five years now, I’ve been reporting on the existence or otherwise of (1) the gold the US Federal Treasury claims to have stored securely at various points across America and (2) a fix/manipulation scam on the price of gold per se. When I first raised these points (along with thousands of other sites) in late 2006, we were all of us consigned by the commentariat of the day to those Outer Limits reserved for The Loonies.
Since that time, we have seen the mysteriously dramatic rise in the level of Chinese gold reserves, the admission by several central banks that they’ve been buying and selling the stuff below the radar, and the scandals involving manipulation of the Libor and Eubor rates which, on their own, make the claims of gold jiggery-pokery look considerably more credible.
During 2009, I reported a couple of times about major gold investors known to me personally who were having trouble persuading Swiss storage facilities to cough up the shiny metal, once those gold-bugs decided they’d like to shift it to somewhere less remote than Cuckoo-clock land. Over the last few weeks, we have seen various sovereign States (led by Germany) saying they’d variously like to audit and/or shift their gold reserves nearer to home. The US Federal Reserve’s delay in obliging its clients with sight and shipping of said stocks has gone from being mildly amusing via odd to alarming.
But now a new fraud has entered the frame.
For those who don’t already know this, tungsten has very nearly the same density as refined gold. Gold sells today at around $1740 an ounce, and Tungsten at $10 a pound. With a bit of judicious disguise, putting tungsten inside a gold bar can even fool an X-ray machine under certain circumstances. A Slog source in Austria is now alleging that Deutsche Bank ‘fulfilled’ one gold repatriation in recent years with the help of Tungsten. He further claims that some of this has now turned up in Asia.
However, here’s the killer: since hearing this rumour (actually, it’s rather more than that, but I have a source to protect here) I’ve made a couple of calls and read some well-argued websites on the subject of tungsten issues. One consistent feedback concerns the Chinese opinion on these bars.
Their origin is thought by Beijing to be the United States of America.
Forbes rubbished the tungsten-in-gold story last March, but from a commonsense viewpoint I was struck by the article’s (a) apparent inability to see beyond drilling and infilling as the method, and (b) the author’s unwillingness to see the problem as only likely to occur in smallish shipments. Late last September, however, Zero Hedge ran a Tyler Durden piece confirming that several smaller retail gold bars sold in Manhattan had been found to have tungsten innards. The ZH take on this event was that it might be part of yet another Fed Reserve attempt to impugn gold’s validity, and thus keep investors locked into the stock market, bonds and property.
But the thing I’m hearing about in this instance – while it could have the same Fed/Central Bank motive – is on an entirely different scale. Here we are talking about an Establishment eurobank alleged to have been caught short on a fulfilment order, and using the tungsten scam to fill the gap.
This is an entirely different criminal intent: not the somewhat crude attempt to con a retail greenhorn, but rather an well-planned and sophisticated ‘salting’ of the gold bars by a major bank….designed to fool even an expert engaged in approving the purchase for a large sovereign client. Here, using perhaps as little as 25% tungsten would be enough to make up the embarrassing shortfall.
There is no reason at all for anyone to see this as far-fetched. The SME scams pulled by RBS, and Libor manipulations carried out across the piece of Establishment banking, have been solid evidence in recent times of desperation on the part of those suddenly faced with a brave new world where Berlin wants all its gold back….but the gold isn’t there any more.
The ramifications of this go far beyond a pro-am retail fraud. First off, ultimate discovery of the scam is a certainty: so you’d have to be pretty damned desperate to try it on. And second, I do find it intriguing that these reports have popped out of the woodwork just when the ECB is thought to be planning some form of gold-backing for any eventual eurobond issues – should the eurozone survive. Trust me, if Mario Draghi is capable of pulling the stunts he’s been at vis-a-vis Greek bailout ‘money’, Bank of Greece money-printing, and bondholder subordination, then like most Goldman Sachs graduates, he’s capable of anything.
As I write, gold is trading at the upper end of $1746-1751 per oz.
Note the geopolitical underpinnings here, for the allegation is that the US central bank and its allies have been involved in massive gold fraud, while the major economy in Europe which coincidentally wants an audit and repatriation of some or all of its gold, and the major economy in Asia, are sending clear messages that they no longer completely trust the financial soundness of the West.
These are major blows, for as I have been trying to outline here and in those books, this system of finance is intimately tied to the post World War Two structure of western power; it is the financial mechanism underwriting Western military preponderance, and Germany, or at least, the Bundesbank, very much is a part of that structure and mechanism… for Germany now to call for audits and repatriation is a major fissure, one that could become a fault line, within that structure…. and it is the Germans themselves who are leading the drive for these calls, while their government continues, unresponsively, to try to remain integrated in that structure…
…the cracks are growing folks….
I'll have to look into alloys of W and Au.
We are well accustomed to exploit more innovative applications of tungsten products. Gold-plated tungsten is one of our main products. Pure tungsten, in the forms of round disc, plate, sheet, ring, and etc., can be perfectly coated with gold layer with clinquant shine, to replace gold or platinum merchandise except its currency function."
"http://www.chinatungsten.com/Tungsten-Alloy/Tungsten-for-Gold-plated-Application.html"
I suspect that Tungsten and Gold would not alloy well, because their melting points are so divergent. Maybe it could be done with crucible particle metallurgy.
Anything to get some gold back to replace the theft ?
Curiouser and curiouser
Ultrasonic is the best and least expensive method to check for the presence of W. The speeding of sound waves through W will only show half of the thickness of AU.
hmm, no I remember the same thing in the 80’s under Carter.
Shysters buy gold from the public at less than spot prices and then sell it for profit to bullion dealers. I wouldn’t be surprised of 30% or more of gold sold to the shysters is stolen in some form or another.
Common people buying guild pay a premium % of spot price. 3% or much more in when in the form of coins or Jewelry.
I would not be surprised to find that some gold storage houses have ripped people off, and most of them probably don’t even realize it.
There is a simple way to assay the gold — melt the bars. Tungsten has a much higher melting point than gold, so the two will separate in such an obvious way that a blind man could see it.
This seems more a “bash the USA” story rather than actual substance.
It seems more a propaganda “cyber” attack.
Put out a few labeled fakes, blame the USA etc. etc.
The only thing missing is a tinfoil hat.
Best way to check your gold bars would be to take them to an industrial shear machine and cut them in half and then eyeball them.
See #13.
Someone ran a binary element phase diagram in teh lst couple of decades, but it’s behind a paywall. The thumbnail shows a single phase with an increasing melting point towards tungstun. I don’t know if the study included physical properties as a function of composition.
Someone ran a binary element phase diagram in the last couple of decades, but it’s behind a paywall. The thumbnail shows a single phase with an increasing melting point towards tungsten. I don’t know if the study included physical properties as a function of composition.
Clearly, elastic flexing of the bars would be the easiest to detect statistically.
Just curious...
If you struck a gold bar vs a tungsten bar, would they “ring” differently? That might be an easy way to tell without a lot of sophisticated equipment, presuming gold bars share a common set of dimensions.
You are correct. Ultrasonic thickness gauges can easily find bars containing a high percentage of tungsten since the speed of sound in tungsten is nearly twice as fast as in gold. Ultrasonic gauges are calibrated for the speed of sound in the material - you must know the material for the gauge to work. If a gauge calibrated for gold looks at a gold plated tungsten bar, the measured bar thickness will be roughly half of the actual thickness. This method gets less accurate if only a small piece of tungsten is embedded in a larger piece of gold. But if the tungsten piece is small then the profit/loss from the fake is small also.
Alloying would be easy to spot, via the electrical conductivity of the ‘gold’ bar. I’m surprised that it is single-phase though.
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