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Whenever a physical asset’s value rises, you can expect counterfeiters to emerge. This is true of everything from collectible comics to precious metals. In the world of the latter, this has created an influx of fake gold bars. This can be a problem for those hoping to invest in bullion.
Unfortunately, there are a variety of ways for fraudulent gold to enter the market. The types of fraudulent activities also vary immensely. Everything from real gold with fake stamps to counterfeit bars backing billions of dollars in loans has been discovered recently.
Fortunately, there’s no reason you have to fall victim to these fake gold bars. With just a few simple safety measures, you can avoid fraudulent bullion and safeguard your investment. This guide will help you on that journey and provide the valuable insight you need in the world of bullion.
Fake gold items of all types have always been an issue. Since at least 600 BC, even fake gold coins have found their way into circulation. This was just mere decades after the creation of the world’s first coinage. When an item holds value like gold, counterfeiters will emerge.
Unfortunately, this problem has quickly escalated in recent years. You only need to look at the price of gold to understand why. The yellow metal climbed to over $2,000 per ounce in 2020, and there’s no indication that it won’t eventually exceed even that high value.
Because fake gold bars are affordable to make— at least relative to the profit generated by counterfeiters — their creation continues even when the price of gold drops. Of course, price decreases weren’t a big issue throughout most of 2020 due to the following developments:
Near the end of 2021, some of these trends were already reversing. While this can drive the price of gold down a bit, there’s no guarantee that new issues won’t arise. Regardless of the current gold price, though, the fact remains that fake gold bars offer big profits.
Many people respond to the increase in counterfeit bars by opting for coins. While buying an American Gold Eagle may seem like a safer option, it’s really not the type of bullion that dictates authenticity. Gold coins are as commonly faked as gold bars.
Safeguarding yourself really comes down to choosing the right source. We’ll discuss this along with tips for avoiding fake gold bars later, but it’s first important to recognize the counterfeits you may encounter. This will help you understand why certain safety measures are necessary.
When someone thinks of fraudulent bullion bars, they likely envision gold-plated base metals. In reality, there are many other types of counterfeit bars out there. In some cases, they may even contain real gold. This can create significant issues in the world’s precious metals markets.
The fraudulent activity most people envision is also the most common. If you fall victim to any type of gold bar scam, it’s likely to be an outright fake piece of bullion. Scammers can take cheap metals and layer them with a thin film of real gold that holds very little value.
This is far from a new occurrence. Back in 2012 — long before gold’s rally nearly a decade later — a New York dealer ended up with tungsten-filled fake gold bars. Tungsten is a popular choice for counterfeit bullion because it has a similar density to gold.
If you buy gold bars from eBay or other online marketplaces (e.g., Facebook, Craigslist), this is the most common form of precious metal fraud you’ll encounter. In some cases, the seller may not even realize they have a fake item. They could also be victims of fraud.
One of the most massive scandals to roil the precious metal markets involved real gold bars with fake stamps. Many people think the branding stamps on gold bullion bars are simply to prove they’re real gold. This is one reason, but these stamps also tell a story of the gold’s origin.
More importantly, they tell us where the bar didn’t come from. It’s illegal to buy or sell gold from certain areas. This often relates to illegal mining and the funding of terrorism and other crimes. Unfortunately, counterfeiters have begun stamping this illegal gold with reputable hallmarks.
You can’t really call these fake gold bars. They’re very real and often contain the exact gold content promised on the counterfeit stamps. Unfortunately, these bars often fund illegal and immoral activities. If you manage to buy one, you very likely own an illegal item.
Authorities are hopeful that banks and other gold storage companies can identify counterfeit marks. What happens when it’s a bank itself, however, that’s putting fake gold bars onto the market? This seems to have occurred with Kingold Jewelry Inc. in 2020.
Kingold Jewelry took out loans equaling about $3 billion USD by using 83 tons of gold bars as collateral. At least, that’s how it looked. It turned out that the bars were a copper alloy with gilded gold. Obviously, this came nowhere close to the value of the loans.
Kingold Jewelry claimed it had no knowledge that the gold was fake. Fortunately, these fake gold bars served as collateral and didn’t make it onto the larger market. In these situations, it’s far more likely that banks will end up with fake gold rather than the common consumer.
It’s fortunate that some fake gold bar issues won’t affect consumers directly. Banks offering loans on fake collateral will not hit you at home. And if you buy a bar with a counterfeit stamp, there’s a good chance you’ll never know the difference. It’s unfortunate but true.
Of course, the risk of buying blatant fake bars still exists. There’s also a small chance that a local dealer may sell real bullion with what should be an obvious fake hallmark. Either of these can blow your investment out of the water.
Fortunately, there are several ways to avoid these possibilities.
Any precious metal item you purchase will have a predefined weight. You can use these weights to minimize the risk of buying fake gold bars. For instance, if you come across bullion stamped “1 Ounce Gold” that weighs .92 ounces, you will immediately know it’s counterfeit.
By taking a digital scale along when shopping locally, you can protect yourself from potentially fake items. The simple fact is that local dealers don’t have the resources of larger companies, so selling a counterfeit bar is one of the many costly mistakes you may encounter.
When you shop locally for gold, you should always check a company’s reviews first. Of course, this doesn’t necessarily guarantee you’ll get authentic items. You’ll have a better chance of avoiding fake gold bars altogether by working with larger national brands.
Take Silver Gold Bull, for example. Every item we get comes directly from reputable mints and refineries. At no point will a scammer have the chance to interject fake items into the supply chain. Since our products come directly from the source, you know they’re authentic.
Many people feel they can get better prices buying directly from eBay and other platforms rather than dealers. Unfortunately, this is inaccurate on several levels. To start, the chance of buying fake gold bars is much higher when purchasing from private sellers online.
Sadly, this isn’t even where the disadvantages end. If you peruse completed listings on eBay and other sites, you’ll typically see gold selling for prices higher than spot value. That’s because precious metal demand remains high and sellers have to cover platform fees.
By opting to buy gold bars from what you believe are discount sites, you’ll put yourself at greater risk for fake gold bars while still paying high premiums.
Each of these steps are simple ways to avoid buying fake gold bars. If you abide by these tips, your investment should provide value for years to come. Of all these tips, though, working with reputable dealers will offer the most benefit.
Of course, it’s possible that you may find legitimate bullion even when ignoring these rules. You may even get a great deal. Considering the risk and the current high price of the yellow metal, though, you’re likely to always garner more advantage buying gold from trusted sources.
Whether they’re dealing with fake bullion or counterfeit refinery stamps, authorities have seen a massive spike in fraudulent bullion. This is an unfortunate reality since many people see precious metals as one of the safest and most legitimate investment strategies available.
There are a lot of bad actors out there, but you’re unlikely to encounter them if you play it safe. Working directly with reputable companies reduces your risk of buying fake gold bars or other counterfeit items. This is the single most important step you can take to safeguard your investment.
At Silver Gold Bull, we only work with reputable mints and refineries. We guarantee every gold item we sell is authentic and comes directly from an established and reliable source. Visit our Gold Bullion Bars product page today to see our massive inventory from trusted providers.
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