(September 24, 2012) - Investors know that learning about precious metal scams to avoid can help them stay safe, but some scams are so well done that they can be nearly impossible to catch unless an expert is involved. A recent report from Fox 5 News in New York City revealed that precious metals, as sound as they may be for investors, are not entirely immune from being counterfeited.
The shocking discovery was made in Manhattan when a customer purchased what appeared to be gold bars from Swiss manufacturer Manfra, Tordell & Brookes. The buyer later found out that the gold bars were filled with tungsten, not gold. This is not the first time that precious metals have been used to coat cheap tungsten which is valued at little more than a dollar per ounce, but weighs almost exactly as much as gold does. The difference this time is that instead of being found in the United Kingdom as they were earlier this year, the forged gold bars were found in the United States. The FBI and the Secret Service have been notified by MTB who is responsible for tracking down organized criminal operations and counterfeiting.
The reporter explained how the scam was uncovered, saying, "Ibrahim Fadl bought the bar from a merchant who has sold him real gold before. But he heard counterfeit gold bars were going around, so he drilled into several of his gold bars worth $100,000 and saw gray tungsten -- not gold."
The unfortunate truth is that criminals can be expected to jump on a scam like this because the profit margin is incredibly high. Criminals stand to pocket millions with relative ease if they have the facilities and skill set needed to pull off this kind of counterfeiting. The probable scenario of entire criminal organizations being involved suggests that the problem could continue to grow and that more bars may be out there in circulation.
Experts believe that the sophistication needed to run an operation of this kind suggests that a lot of resources have been invested into it and that means that there is likely plenty more product out there in circulation. The best advice to individual investors is to solely deal with reputable gold dealers. They should examine the authenticating paperwork with their purchase for anything out of the norm and try to do their homework regarding who they do business with. Clearly, incidents such as this forgery in Manhattan are exceedingly rare, but they do happen.
All investors understand that taking risks is part of what they do, but that the real goal of investing is taking intelligent risks where they fully understand the stakes. Anyone choosing gold bars should be suspicious of unusually low prices; the same goes for any other precious metal. Stick to paying fair prices and dealing with trusted vendors.