In the US, fake gold is now a growing problem that is not being tackled. Congressman Alex Mooney (not Money!) has just written to the US Mint of the growing problem of high-quality counterfeits. He also wrote a letter to the Mint in November 2017 but the Mint responded that the problem was not significant. But the US Secret Service has since briefed the office of Congressman Mooney about the extent of the problem and the lack of supportive actions of other agencies. There we have it – a complacent Mint on the one hand and a Secret Service which is involved in fake gold on the other hand. So this is clearly a major problem.
CHINESE GOLD “FACTORIES”
Counterfeit gold coins have been around since the coinage of gold first started in the Greek city of Lydia around 600 BC. Fake gold bars and coins are ubiquitous and many owners of gold are not aware that they have fake gold. I realized the widespread presence of fake gold when I was interviewed in Sydney by an Australian television news team a few years ago. This team had just visited a “gold factory” in China. They had covertly filmed the manufacturing of fake bars and coins. They told me that
they bought $500,000 of fake gold for $500
. These were gold bars and coins with well known brands of LBMA refiners in Switzerland and Australia. For a layman it was not possible to tell that they were fake. There clearly could not have been much gold in these bars since the price was 0.1% of the value of real gold. It would probably have been enough to scratch the surface to find the tungsten which I assume was the metal inside.
FAKE GOLD WILL FLOOD MARKET
Learning about fake gold factories in China gave me invaluable information of what will happen when the gold price goes up. It became very clear to me that
the more gold appreciates the more fake gold we will see on the market.
The natural consequence of a higher gold price will be a surge of gold factories around the world making fake gold. As gold goes to $2,000, $5,000, $10,000 and much higher when hyperinflation sets in, there will be opportunistic “entrepreneurs” flooding the gold market with fake bars and coins. The coming gold mania will create a massive demand for gold and desperate retail buyers will buy gold from any source, unaware if it is genuine or not. The coming shortage of gold will force buyers to obtain gold from whatever direction, whether it is Ebay or disreputable dealers.
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