For gold investors, the idea of buying gold that is not actually gold certainly leads to a certain amount of trepidation. It turns out that as gold prices rise, rumors do begin to circulate as has been shown in the past in the gold investing community. Today, a rumor is in circulation that some of the would-be profiteers are trying to pass off fake tungsten gold bars as gold. Cheap substitutes have long been tried to trick those investing in gold in order to get a slick profit and whether the tungsten rumor turns out to be true or not remains to be seen. However, understanding the history of tungsten can help investors building a precious metals portfolio better understand this situation.
In order to understand the level of profit motive in producing something like fake tungsten gold bars, one really should look to the discrepancy level in terms of cost of materials. Massive difference in price means that, as the article cited, a 4 cent counterfeit $100 bill would mean a profit of $99.96 per bill. Obviously, this kind of profit is highly illegal, but for criminals the allure of that much profit per cheaply produced bill is strong. If we take a look at what gold investors pay for a pound of gold, around $18,000 right now, we can then look to what it costs to produce about the same amount of tungsten. The cost for a pound of tungsten is around $25 right now. It does not take a mathematician to see that the profit margin here is enormous and thus, passing off fake tungsten bars to those investing in gold could be especially profitable.
Gold prices fluctuate and when they are especially low, investors like to rush in and grab what they can at a low price. At this point, those looking to scam investors would be most likely to try to sell their fake bars to the average investor. Lower risks are involved in a person to person transfer than in trying to sell a fake gold bar to an experienced dealer.
This rumor, whether 100% accurate or not, does underscore the importance for gold investors in only doing business with those they trust. Researching those offering gold, especially in bar form due to the high amount of money being paid, is extremely important. Not all people play fair and finding out their record for ethical business practices is part of the due diligence that all investors should do before they purchase any precious metal, other commodity or even stock in a company.
Methods for detecting whether a gold bar contains tungsten or not are still being developed. Part of the problem is that the gold bar would need to be altered significantly in order to test for the presence of tungsten and this could affect the price that one can ask for it on the open market. These issues and more are being addressed by those investing in gold, however, and experts do expect breakthroughs to be forthcoming in easy detection methods.