Caution!! Tungsten filled Gold bars

Caution!! Tungsten filled Gold bars

While this is NOT my original content, I have added to an original blog post handed down through the inter-webs from an unknown origin.  I DID take some time to verify links and source stories.

This news item will have significant repercussions through the precious metals markets in the days and months to come. Australian Bullion Dealer ABC Bullion has advised that one of its suppliers has provided them photographic evidence of a tungsten filled 1 kilo gold bar discovered this week. The bar passed a hand-held xrf scan which showed 99.98% pure AU. The tungsten was only discovered when the bar was physically cut in half. After numerous reports of 400oz tungsten filled bars being discovered in Hong Kong, this is the first documented and verified report with photographic evidence that has been made public.

In addition there is some early buzz that eBay acquired silver and gold coins, bullion and such may have some level of weight shaving or impurities. For the casual investor or collector this is significant. 

This from ABC Bullion:

"Many pundits in the gold commentary space have commented on tungsten filled gold bars for many years, most notably Jim Willie, whilst the following does not prove his theories that US Treasury gold is compromised, it certainly makes the case more compelling.

ABC Bullion received the following email from one of our trusted suppliers this week.

Note: It was not ABC Bullion that purchased this bar, the email and photos were sent to us as a general warning. I xxxx'ed out the city's name to avoid any second guessing as to the name of the dealer. 

19/03/2012: Attached are photographs of a legitimate Metalor 1000gm Au bar that has been drilled out and filled with Tungsten (W). This bar was purchased by staff of a scrap dealer in xxxxx, UK yesterday. The bar appeared to be perfect other than the fact that it was 2gms underweight. It was checked by hand-held xrf and showed 99.98% Au. Being Tungsten, it would not be ferro-magnetic.

The bar was supplied with the original certificate. The owner of the business that purchased the bar only became suspicious when he realized the weight discrepancy and had the bar cropped. He estimates between 30-40% of the weight of the bar to be Tungsten. This is very worrying and reinforces the lengths that people are willing to go to profit from the current high metal prices.

Please be careful."

 

So what can a collector or investor do? For starters buy from legitimate and reputable sources.  If buying gold, due to the high cost get certified bars and rounds that are serialized and certified by groups such as Credit Suisse or PAMP.  Keep in kind if the deal is too good to be true, it IS.  Almost never will you find precious metals trading at below spot prices.  Even idiots selling off an old coin collection usually sell at spot since Google is so handy there.

Unless you know the reputation, source and history avoid or minimize your exposure from sites like eBay and Craigslist.  You want some means to go back if your metals prove fraudulent. Obviously those purchasing gold bars have a much higher investment and risk.  Tungsten filled bars is significant.  From Wikipedia Tungsten, also known as wolfram, is a chemical element with the chemical symbol W and atomic number 74. The word tungsten comes from the Swedish language tung sten directly translatable to heavy stone,^[3] though the name is volfram in Swedish to distinguish it from Scheelite, in Swedish alternatively named tungsten.

A hard, rare metal under standard conditions when uncombined, tungsten is found naturally on Earth only in chemical compounds. It was identified as a new element in 1781, and first isolated as a metal in 1783. Its important ores include wolframite and scheelite. The free element is remarkable for its robustness, especially the fact that it has the highest melting point of all the non-alloyed metals and the second highest of all the elements after carbon. Also remarkable is its high density of 19.3 times that of water, comparable to that ofuranium and gold, and much higher (about 1.7 times) than that of lead. Tungsten with minor amounts of impurities is often brittle and hard, making it difficult to work. However, very pure tungsten, though still hard, is more ductile, and can be cut with a hard-steelhacksaw.

So be careful, be smart and happy collecting.

http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here

http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan

Silver as an investment

Silver, known to chemists as Ag, is a precious metal.  It is precious to investors as well.  To begin silver’s story, lets discuss some physical properties of this magical metal.  It is a relatively soft, lustrous metal.  It has the highest electrical and thermal conductivity of any metal, making it very useful in commercial application and electronics. Silver nitrate was heavily used in film and processing, and as that industry has declines it can commonly be found in solar photovoltaic panels. It of course polishes nicely and is very shiny, which makes it an excellent material for jewelry, art and coin.

Throughout history silver has been traded and horded among various cultures.  It has been used as currency dating back to 700 BC and was a staple of the Roman Empire monetary system. In the United States silver has been in much of the early coins produced until the 1960’s.  Many of our early dimes, quarters, half dollars and silver dollars contained some quantity of silver.  In recent years the silver has been replaced by more base metals like copper and tin.

The price of silver has fluctuated throughout history reaching a price-adjusted peak of $1,300 peak in the 15^th century.  Most recently it’s hovered in the low $30.00 range. Generally the price of silver is volatile.  It’s not as rare as gold and it is actively being mined in several spots around the world. It is thought that the current world silver reserves are over 600,000 tons. 

What does this mean for the average person? I believe that the average person should consider silver a potential investment vehicle.  Silver as an investment can be had as old coins, often called ‘junk’ silver as they are pre 1964 silver coins that have little numismatic value, bullion, or official silver currency.  Some popular silver coins include the American Silver Eagle and the Canadian Maple Leaf.  Silver also comes in various size rounds; bars and even gram size or break away sheets. Silver, specifically bullion is traded in the precious metals market, and can be included in many financial products like IRAs. For example, Individual Retirement Account (IRA) participants may choose to include silver bullion coins and bars in their portfolio, provided that they are of a fineness of at least 99.9% silver. As a disclaimer, I offer no investment advice.  Investing of any sort has risks and you should always perform your own research, and consult with professionals before you invest. Personally I believe in diversification and hedging my portfolio with precious metals, various stocks and bonds prepares me for many future possible economic conditions.

Why silver? Well, its more affordable than gold for the average person.  At today’s (November 2012) rates, silver is about $34 an ounce while gold is $1750 an ounce.  Many arguments for gold versus silver and why one or the other could be made, but for some people holding something of material worth in their hand is what makes silver the better choice.  If I have $300 to spend I can hold a handful of silver coins or one small gold coin.  Psychologically it is more satisfying to hold close to ten ounces of silver. Also the economic forces that influence stocks and bonds are often not the same as those that influence precious metals.  This alone makes silver a good hedge in a balanced and diversified portfolio.

Inflation Resistance

Many like silver for its inflation resistance. Some say its inflation proof, but I will hedge my bets and stick with resistance. The purchasing power of the U.S. dollar has steadily declined over time and is expected to continue to do so. The United States faces a ‘fiscal cliff’ and massive budget shortfalls.  There is a moderate level of economic uncertainty.  One past and probably short-term future solution is for the Federal Reserve to request an injection of money into the system.  While often providing an illusionary boost to the economy this move has a depressing long-term impact on the value of the dollar. One of these impacts is inflation.  Inflation has many theoretical causes and there are many opposing viewpoints.  In general inflation is not desirable for an economy, especially one in a depressed economic time. Inflation has many causes, but consumers feel is as a loss of purchasing power.  Simply put, our money buys less. Silver has been considered inflation resistant because over the same period as the US dollar has declines in purchasing power, silver has risen in purchasing power.  One ounce of silver in 1950 sold for about 0.75 cents.  Today that same ounce is worth $34.00.  However adjusted for inflation that same 0.75 cents would be worth about $9.60 today. In 1950 you got a full ounce of silver, and in 2012 you could get 1/3 as much.

In the United States the Federal Reserve manages the US currency. The Congress established three key objectives for monetary policy—maximum employment, stable prices, and moderate long-term interest rates—in the Federal Reserve Act. Based on current economic conditions a central bank has the ability to cause purposely or inadvertently an inflationary period, deflationary period or devalues their currency. ‘Devaluation’ means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. In contrast, depreciation is used to describe a decrease in a currency's value (relative to other major currency benchmarks) due to market forces, not government or central bank policy actions.

Investing in silver is much more than hedging against inflation or currency devaluation.  It is also about diversification and having something tangible.  Most Americans get electronic deposit, use debit and credit cards and rarely if ever see cash.  The cash they do see is paper currency and few folks appreciate the heft of coins in their pocket or purse.  It is easy to loose sight of the value of these electronic intangible bits.  Sure, we can all balance a checkbook and know  $1000 comes in, and five bills later we have $200.  But with debit purchases, electronic transfers and credit cards, each new American generation is removed one more step from hard tangible currency. I know a few people who say they can keep just a debit card and have $5000 in their pocket. There is something to be said for possessing a tangible item of worth. Precious metals are useful in that silver due to its lower cost is capable of being used to possess a moderate wealth in a small space.  While someone can carry a debit card linked to a $5000 account, $5000 in gold is a few small coins and $5000 in silver could fit in a pocket still.

What to buy – coins, junk, rounds, bars?  In my opinion the key is source and price.  Sad to say, you can get scammed.  Disreputable souls will try to sell you fake silver and gold and pass off counterfeit as real. Always purchase from reputable dealers and sources.  If you are looking for junk silver, then head to an established local coin shop who is a member of the various numismatic organizations, and even the local BBB.  Buy local and support local.  The US Mint, and Royal CanadianMint, among others sell direct.  Many reputable silver companies also sell direct as a few dollars over spot.  Provident Precious Metals, Kesef Silver, APMEX, NorthwestTerritorial Mint are all possible sources for your silver purchase. When investing in silver – or making any investment, for that matter – you should always consult with well known, reputable brokers, bankers, financial advisors or dealers. Prior to making any investment, you should make sure the seller is capable of delivering exactly what it is selling, and is providing you with the conditions under which it stands ready to buy back your silver.

Good luck and happy silver collecting.