14 ms·

Fake-branded bars slip dirty gold into world markets

95 points by aazaa 7y ago

fanzhang 7y ago
According to the article, the gold bars are actually high-purity real gold. Then the difference in price must be the small markup that branded stamped gold bars get. This seems very different from the normal forgery I would expect where the forger gets a large fraction of the bar's value. If the bar is actually real gold, the nature of the damage is different. It's less about undermining gold than it is about undermining the brand of the stamp.
- jki275 7y ago
  I think it's not only that, it's allowing smuggling of gold that isn't sourced ethically, which is quite important to some people -- and also does, as you say, undermine the brand as well.
  - turk73 7y ago
    For all of human history, most of the gold was not sourced ethically. Whether you are talking Conquistadors or Nazis ripping out fillings, the whole point is plunder. It's like it is built into our very DNA. That is the "brand."
- peterburkimsher 7y ago
  It's about money laundering. The stamps give a sense of authenticity, that the gold came from legitimate sources. By faking the stamp, gold from other sources (e.g. conflict zones) can be passed off as being from Swiss refineries, and thus used to launder money.
  - ryandrake 7y ago
    Sorry, but as a layman I don’t get it. How does putting a fake stamp on a real commodity item help me to launder money? Is it like shoes where an identical product with the right logo costs more? This wouldn’t seem to affect anyone except the refinery who wanted to charge more for a logo, and I don’t see how it ties in with money laundering.
    - jotm 7y ago
      The way I see it: Say you've got a source of gold that no one else will touch (illegal mine, sanctioned country, slave labour, stolen gold, etc). It costs you way below market price, but no one will buy it from you. You pour it into bars, stamp it with fake brands and sell it at market price to anyone you want. Instant profit and your hands/money are clean.
      - petre 7y ago
        Certain parties operating in the UAE will touch it. This is just one further step away from selling it as jewlery. https://www.hrw.org/news/2016/04/12/dispatches-child-labor-dubais-gold-supply-chain https://www.hrw.org/news/2016/04/12/dispatches-child-labor-d...
      - otherme123 7y ago
        I tend to think the article is trying to inject some shadow over gold market, like in "careful with buying gold, you'll probably end up buying a bar of rusty iron". You have to read four paragraphs to read the first explanation that there's no problem with the gold quality. Gold may be the dirtiest commodity out there. There are plenty of people that buys gold without worrying about its origins, to immediately melt it into something else. People that doesn't care where a meth head got this 24k gold necklace, will trade it for about 10% its value and melt it into jewelry again. I'm sure the last worry of people buying gold bars is the source of them, specially if you can get them at a small discount. "Hey, look: I'm getting rich selling tobacco to children, weapons to both sides of a war, paying doctors to prescribe my drugs, flooding the oceans with crude oil... but that gold origin is what worries me at the end of the day."
      - SilasX 7y ago
        So, like Die Another Day, where that villain takes blood diamonds into Iceland to obscure their origin and sell them like they came from there?
    - kd5bjo 7y ago
      Some unsavory regimes are in control of natural resource mines (like gold or diamond). In an attempt to withhold funds from these regimes, it’s common to not buy gold or diamonds that came from these places, despite them being the same physical product. By counterfeiting the stamp, gold from these places can be passed off as being from one of the acceptable regions of the world. This is effectively smuggling items through a metaphorical blockade.
- mc32 7y ago
  As others indicate the problem isn’t the gold, the problem is the provenance of the gold. It’s used to launder money.
  - matt-attack 7y ago
    Sure. But if you’re accidentally in possession of one of these bars, it’s not like you’ve been scammed into buying lead with gold paint. You still own the amount of gold you thought you owned.
- achow 7y ago
  If one replaces gold with crude oil then the gravity of this becomes clear. What if Venezuela is smuggling its camouflaged crude oil inside Norwegian oil tankers?
  - vardump 7y ago
    Different wells produce very characteristic product that's hard and expensive to mask. You could tell it from API gravity and sulphur content, among other things. See: https://en.wikipedia.org/wiki/List_of_crude_oil_products https://en.wikipedia.org/wiki/List_of_crude_oil_products So I don't see how you could economically camouflage crude oil from relatively simple chemical tests.
    - rtkwe 7y ago
      The question is are governments/companies checking and monitoring that actively enough to catch it or do they only check when they have suspicions about the provenance of some oil already.
  - Fjolsvith 7y ago
    Big deal. There's a glut of oil and a dearth of gold.
    - achow 7y ago
      Big deal for Maduro.
    - Eliezer 7y ago
      I hear rumors that there are exactly as many units of oil sold as units of oil bought, and the same holds true for gold. I honestly have no idea what you could mean by saying that there's a glut of one and a dearth of the other.
      - dagenix 7y ago
        By that logic, you could never have an excess or dearth of anything.
- ryanmercer 7y ago
  >This seems very different from the normal forgery I would expect where the forger gets a large fraction of the bar's value. The only way to make passable fake gold bullion based on weight is to use tungsten clad with gold, and even that is trivial to detect with any proper equipment (which can be hard commercially starting around the cost of an ounce of gold) if the cladding isn't sufficiently thick. Silver is faked way, way, way more wildly. I'm a mod of /r/silverbugs and I've been compiling a list of fakes members of the sub have found over the years, there's some really fake gold in there too https://www.ryanmercer.com/ryansthoughts/2014/8/22/fake-silver.html https://www.ryanmercer.com/ryansthoughts/2014/8/22/fake-silv...
  - deleted 7y ago
    [deleted]
  - microtherion 7y ago
    > The only way to make passable fake gold bullion based on weight is to use tungsten clad with gold <hat scientist="mad"> Couldn't you, say, mix plutonium with a small amount of lead to dial in the weight you need? </hat>
    - philipkglass 7y ago
      Metallic plutonium is far rarer and more tightly controlled than gold. There is no civilian market for it. Building a new plutonium separation-and-metallization facility for processing spent civil nuclear fuel is more expensive than a new gold mine. Plutonium is also easy to detect by its radioactivity.
      - microtherion 7y ago
        Yes, I know all of that, was just asking why this would be detectible by weight. Picked plutonium for the lulz. It looks like osmium or platinum would be cost effective, at today's gold prices.
        philipkglass 7y ago
- anonu 7y ago
  Totally agree. This is more akin to "conflict diamonds" - where the provenance is important. Ultimately, the powers that be want to control the money supply and dollar flows. If gold is coming from an "unauthorized source" this disrupts the stability of the system. I know this sounds a bit "conspiracy theory"-ish but I've come to view the global banking system in such a light: there are a few powerful players (namely the US) that need to know where money is flowing at all times.
  - notyourday 7y ago
    That's not the case : people like to say that it is the case but "conflict diamonds" are used all the time, all over. It is the open secret in diamond district in NYC and among the dealers to the stars in LA and European capitals.
- notyourday 7y ago
  > Then the difference in price must be the small markup that branded stamped gold bars get. The bid/ask spread on the gold bars at the same dealer is close to 30%. The other markup is peanuts. That's why it gold as the "investment" is mostly sold via day time infomercial on second rate TV networks ( the ones that currently broadcast in 480i ) and second rate cable channels as well as promoted by the likes of Glenn Beck right next to "have your own seed bank so you can plant your own garden for food when the economy collapses". JPM made a lot of money serving those outfits but for it gold bar is just a blob of a certain weight and certain purity.
  - DennisP 7y ago
    Someone else suggesting gold as an investment is Ray Dalio, who runs the world's largest hedge fund. As part of a portfolio, it helps because it's a largely uncorrelated asset that tends to do well when everything else is crashing. Of course, if you're doing that you're probably going to buying GLD or IAU, which closely track the spot price of gold. Or maybe you'll use an outfit like BullionVault, which has a spread comparable to large stocks, nowhere near 30%.
    - notyourday 7y ago
      > Or maybe you'll use an outfit like BullionVault, which has a spread comparable to large stocks, nowhere near 30%. Which does not provide delivery of the gold bars.
    - DiogenesKynikos 7y ago
      In a negative-interest-rate environment, gold is also more attractive, since 0% interest is better than -X% interest.
  - johnrgrace 7y ago
    You are looking at the wrong dealers, the non "scam" dealers for say 1 ounce gold coins have a 3-5% difference between their buy and sell prices. https://www.providentmetals.com/1-oz-us-american-gold-eagle-coin-dates-our-choice.html https://www.providentmetals.com/1-oz-us-american-gold-eagle-...
deleted 7y ago
[deleted]
phn 7y ago
Would it be feasible to make signed gold bars, verifiable with some kind of public key? Or by inserting all gold bars and their journey on a (perhaps blockchain-like) database verifiable by anyone?
- vasco 7y ago
  So anyone would be able to know if you have 2 gold bars on your backyard?
- moviuro 7y ago
  1. Without giving it much thought, it's probably impossible to prevent "replay" attacks. If I have listed tens of valid signatures, I can use them on my new fake bars on the other side of the world, hoping my fake bar with good signature never meets its genuine alter-ego. 2. This sounds sane and feasible, but I'm not sure how anyone would deal with a bar leaving and then re-entering the system. If I'm a jeweller, I might buy a kilobar and melt it for rings, etc. It's inscribed as having left my seller's stock, just as the bar I bought as a random individual. One bar is meant to reenter the market, the other one not so much... how would you deal with that?
  - maxerickson 7y ago
    The originator of the bar/signature could track each one and disavow the ones they lost track of. Not a great solution, but it would reduce replay attacks. The jeweler could notify the originator that they destroyed a bar.
    - moviuro 7y ago
      > disavow the ones they lost track of So as an individual, I have to trust the originator to keep the whereabouts of my kilobar private?... This is most probably a very bad idea.
      - maxerickson 7y ago
        Sure, it wouldn't serve all purposes. But for a jeweler that wanted an auditable supply chain, it would be fine. For buyers wanting privacy, the could have a mechanism for the seller to tell them to discard the signature. It makes it useless for future transactions of course, but it would prevent replay up until point.
moviuro 7y ago
If the fake bars still don't meet the purity standard but are getting close (in the article: 99.90, 99.97 or just short of 99.99), maybe up the standard? Jump to 99.995 if technology allows. For banknotes, regular rollout of new formats (shape and shade) helps break counterfeit printers. [0] Maybe push for a new, somewhat different format? [0] https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.en.html https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.e... https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr190528~b1158f43b6.en.html https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr1905...
- mruts 7y ago
  They do meet the purity standards, that’s the point. A better idea would to put a public key on each gold bar so that anyone can verify the authenticity. The producers could then compile a list of all the current locations of the gold and if someone tries to report a new inconsistent location, flag it as a fake.
  - moviuro 7y ago
    I didn't understand that from the article. I understand that while counterfeits are getting better, they are still not perfect imitations. > “The level of counterfeit is becoming really good. Even for us it is hard to tell,” said a Swiss refinery executive who spoke on condition of anonymity. “They are, however, slightly less pure because the people doing the counterfeits don’t have the equipment we have.” For point 2, that's not going to work (copy-paste that key on another bar + zero anonymity or privacy protection + no protection if fake bar is introduced when real bar is out in the wild (in my backpack for example)).
  - gwbas1c 7y ago
    > A better idea would to put a public key on each gold bar so that anyone can verify the authenticity Specifically: - Each gold bar has a unique ID, on the bar - A digital signature is made with the private key - The digital signature is placed on the bar - Everyone has to "know" which public key belongs to who (If you put the public key on the bar, then the criminals will just generate their own keys or copy someone else's key.)
tomkinstinch 7y ago
The coolest solution I've read about to note the producer is to emboss a hologram in the metal, though perhaps with enough care this too could be faked or copied: https://en.m.wikipedia.org/wiki/Kinebar https://en.m.wikipedia.org/wiki/Kinebar
- ryanmercer 7y ago
  There are other methods like this, Sunshine Minting for example has a 'decoding lens' for their products that contain the 'MintMark SI security feature'. http://www.sunshinemint.com/TechnologyEnhancements.aspx http://www.sunshinemint.com/TechnologyEnhancements.aspx --- Geiger Edelmetalle , on their Geiger branded stuff, uses a a UV safety coating but it will rub off with enough handling (which is why many of us do not remove the shrink wrap they put on their bars), they also individually assign serial numbers that can be tracked online for gold and silver bars starting at 1 gram https://www.geiger-edelmetalle.de/en/about-geiger/news/geiger-original-new-product-series https://www.geiger-edelmetalle.de/en/about-geiger/news/geige...
- lixtra 7y ago
  The coolest solution I heard was to look at a well defined spot of the gold bar and register the impurities/bubbles/structure that naturally happen while casting. This is very difficult to reproduce (because there is no legitimate need to do so) and is already present. Edit: And of course put the info on block chain.
m3kw9 7y ago
The damage is more about criminals getting money laundered and hurting crime fighters and also sanctions
_pmf_ 7y ago
Physical shitcoin.
blobbers 7y ago
The scale of this article seems to not be 'crisis' worthy. Criminal organizations, governments or oligarchs laundering 50 million dollars is nothing new or noteworthy.
- lostgame 7y ago
  I'd agree - it's not crisis-worthy, but it is at least technically interesting, which makes it alright to be here, IMHO. I've seen a lot of posts on the front page the last few days that seem to be losing technical relevance, or, straight-up just don't even pique my curiosity. I should find another aggregator and try to submit some quality technical stuff the next couple days. :) No point in complaining about something you can help fix.
- wiglaf1979 7y ago
  Yep. If you do want to hear some 'crisis' worthy numbers in a similar vein as this article I highly recommend giving "Moneyland" a chance. That's where the money laundering gets bumped up into the professional level. I am glad I listen to the audiobook but man is it disheartening to hear how bad it is globally. https://www.npr.org/2019/05/01/719001286/moneyland-reveals-how-oligarchs-kleptocrats-and-crooks-stash-fortunes https://www.npr.org/2019/05/01/719001286/moneyland-reveals-h...
- Ellen_Monp 7y ago
  Is it just 50 million or could there be more that hasn't been reported? Is the money used to bribe officials, pay for espionage efforts worth $10b? Is a crisis based on the base value or the overall cost that comes from it?
notyourday 7y ago
This entire thing is silly. Gold is a commodity. A gold bar is simply a unit of trade in a specific sub market. There's not enough volume for gold bar trade to be liquid. So gold bar market is a market of mattresses before the ship in a tube mattresses showed up. Dealers that trade gold pretend that Gold Bar X is More Valuable Than A Gold Bar Y which is why it is priced higher. The real reason is that dealer feels the dealer can extract more money from a customer and the dealer happens to have Gold Bar X. Customers of the sucker variety think that by paying for Gold Bar Brand Y more than equivalent Gold Bar Brand X they are getting "more value". The thing is that the spread between bid/ask of a single gold bar is much higher than the delta in price of a Gold Bar X and a Gold Bar Y. This has been the case for at least last twenty years.
gyrfalcon 7y ago
"financiers and regulators as they attempt to purge the world of illicit trade in bullion." Financiers & Regulators trying to control trade... Why not call them what they really are? Fascists
ChuckMcM 7y ago
Not too surprised by this. I have always been curious though about folks who came across gold in one form (like a sunken treasure, or pillaging a museum in a war zone) and wanted to turn it into cash, what prevents them from just melting it down into bars and selling it that way. Saving themselves the step of actually going to a refinery which is going to ask uncomfortable questions seems like a logical step to me.
- jimpudar 7y ago
  Nothing stops them, it's just that it will be harder to convert into cash than if the gold was stamped. For example, if I take a couple of Canadian Maple Leaf coins to any local "We Buy Gold" shop, I'll get very close to spot price in cash with no questions asked. The fact that they clearly came from the Canadian mint tells the dealer that they can trust they are indeed made of 99.99 pure gold. If I come to the same dealer with a bar of gold I melted and poured myself, they may need to send it out to a lab for analysis to determine the purity, actual weight, if I'm ripping them off, etc.
qwerty456127 7y ago
What the heck does the world need gold bars for if these are not allowed to be traded freely without being legitimately stamped with the logos of major refineries? If gold still has to be controlled this way, why not just issue some kind of global money instead and stop drilling Earth for this? Also, what distinguishes a warlord from an ordinary dictator which still is allowed to use gold?
syshum 7y ago
Why is that an issue? I am sure I will get downvoted to hell here because HN is full of Authoritarians, but money "laundering" should not even need to be done, I should not have to have a Special stamp to trade gold, or report money transfers to the government, etc It is a prime example of government creating a problem (a black market) for things that should not be illegal in the first place (drugs and other items), then having new laws that infringe further on peoples freedom to "solve" the problem which itself creates even more problems
- jonfw 7y ago
  Would you agree that money laundering is an issue when politicians have to conceal bribery?
  - syshum 7y ago
    Political Bribery is a symptom of too much consolidation of power, and/or too much power in government in general Systems of distributed power, with robust checks and balances are the solution to political corruption, not authoritarian money laundering laws
    - mc32 7y ago
      Im not sure that’s a hard rule. China strong power consolidation, India is more distributed and the central gov is relative to China weaker, but while both suffer forms of corruption, India is above and beyond what you’d experience in China, from talking to folks familiar with both places.
      - syshum 7y ago
        I am not really familiar with India's government but I suspect they suffer from the same problem that hard core "States Rights" people in the US Suffer from When I say Distributed power, with Checks and balances, that does not simply mean small regional Fifedom's with unlimited power. I suspect India's weak central government has limited power over the local regional governments making them very corruptible. "Distributed power" is not synonymous with "small regional power" One of the things the US gets right is neither that state nor the federal government is "more powerful" than the other, each have their place, and both can in different circumstances overrule each other, this has the benifiet of ensuring States do not go crazy with power and corruption, and that the feds do not go crazy with power and corruption Over the last 200 years however we have consolidated ALOT of power into the Federal government, this is making things very very bad if you enjoy and prefer an individualist society with personal liberty
chiefalchemist 7y ago
> "The fakes are hard to detect, making them an ideal fund-runner for narcotics dealers or warlords." Or human-traffickers. Or just about any nefarious agent. At some point, we need to look beyond the Hollywood cliches.
- tim333 7y ago
  Indeed sounds here that the main use is avoiding capital controls in China and similar. I'm not sure that's even breaking the law once the things are outside China.
logfromblammo 7y ago
Pecunia non olet. Gold has no smell. If the bars are genuinely made of gold, and of the advertised weight and purity, they are not counterfeit. The quantity of metal is the only thing that matters. If anything, the problem is the attempt to shoehorn provenance information into what is clearly a money commodity, and one that loses its individual identity every time it gets re-melted. Just let it go, man. You can't track all the money on the planet all the time. If this is a problem, the only solution is to demonetize gold and replace it with a trackable, traceable substitute. And good luck with that. You'd be replacing trust in chemistry and physics with trust in the money-tracers.
tuberelay 7y ago
How do they know that these bars don't have 10% tungsten content deep inside? Have they drilled them?

95 points by aazaa 7y ago

According to the article, the gold bars are actually high-purity real gold. Then the difference in price must be the small markup that branded stamped gold bars get. This seems very different from the normal forgery I would expect where the forger gets a large fraction of the bar's value. If the bar is actually real gold, the nature of the damage is different. It's less about undermining gold than it is about undermining the brand of the stamp.

jki275 7y ago
I think it's not only that, it's allowing smuggling of gold that isn't sourced ethically, which is quite important to some people -- and also does, as you say, undermine the brand as well.
- turk73 7y ago
  For all of human history, most of the gold was not sourced ethically. Whether you are talking Conquistadors or Nazis ripping out fillings, the whole point is plunder. It's like it is built into our very DNA. That is the "brand."
peterburkimsher 7y ago
It's about money laundering. The stamps give a sense of authenticity, that the gold came from legitimate sources. By faking the stamp, gold from other sources (e.g. conflict zones) can be passed off as being from Swiss refineries, and thus used to launder money.
- ryandrake 7y ago
  Sorry, but as a layman I don’t get it. How does putting a fake stamp on a real commodity item help me to launder money? Is it like shoes where an identical product with the right logo costs more? This wouldn’t seem to affect anyone except the refinery who wanted to charge more for a logo, and I don’t see how it ties in with money laundering.
  - jotm 7y ago
    The way I see it: Say you've got a source of gold that no one else will touch (illegal mine, sanctioned country, slave labour, stolen gold, etc). It costs you way below market price, but no one will buy it from you. You pour it into bars, stamp it with fake brands and sell it at market price to anyone you want. Instant profit and your hands/money are clean.
    - petre 7y ago
      Certain parties operating in the UAE will touch it. This is just one further step away from selling it as jewlery. https://www.hrw.org/news/2016/04/12/dispatches-child-labor-dubais-gold-supply-chain https://www.hrw.org/news/2016/04/12/dispatches-child-labor-d...
    - otherme123 7y ago
      I tend to think the article is trying to inject some shadow over gold market, like in "careful with buying gold, you'll probably end up buying a bar of rusty iron". You have to read four paragraphs to read the first explanation that there's no problem with the gold quality. Gold may be the dirtiest commodity out there. There are plenty of people that buys gold without worrying about its origins, to immediately melt it into something else. People that doesn't care where a meth head got this 24k gold necklace, will trade it for about 10% its value and melt it into jewelry again. I'm sure the last worry of people buying gold bars is the source of them, specially if you can get them at a small discount. "Hey, look: I'm getting rich selling tobacco to children, weapons to both sides of a war, paying doctors to prescribe my drugs, flooding the oceans with crude oil... but that gold origin is what worries me at the end of the day."
    - SilasX 7y ago
      So, like Die Another Day, where that villain takes blood diamonds into Iceland to obscure their origin and sell them like they came from there?
  - kd5bjo 7y ago
    Some unsavory regimes are in control of natural resource mines (like gold or diamond). In an attempt to withhold funds from these regimes, it’s common to not buy gold or diamonds that came from these places, despite them being the same physical product. By counterfeiting the stamp, gold from these places can be passed off as being from one of the acceptable regions of the world. This is effectively smuggling items through a metaphorical blockade.
mc32 7y ago
As others indicate the problem isn’t the gold, the problem is the provenance of the gold. It’s used to launder money.
- matt-attack 7y ago
  Sure. But if you’re accidentally in possession of one of these bars, it’s not like you’ve been scammed into buying lead with gold paint. You still own the amount of gold you thought you owned.
achow 7y ago
If one replaces gold with crude oil then the gravity of this becomes clear. What if Venezuela is smuggling its camouflaged crude oil inside Norwegian oil tankers?
- vardump 7y ago
  Different wells produce very characteristic product that's hard and expensive to mask. You could tell it from API gravity and sulphur content, among other things. See: https://en.wikipedia.org/wiki/List_of_crude_oil_products https://en.wikipedia.org/wiki/List_of_crude_oil_products So I don't see how you could economically camouflage crude oil from relatively simple chemical tests.
  - rtkwe 7y ago
    The question is are governments/companies checking and monitoring that actively enough to catch it or do they only check when they have suspicions about the provenance of some oil already.
- Fjolsvith 7y ago
  Big deal. There's a glut of oil and a dearth of gold.
  - achow 7y ago
    Big deal for Maduro.
  - Eliezer 7y ago
    I hear rumors that there are exactly as many units of oil sold as units of oil bought, and the same holds true for gold. I honestly have no idea what you could mean by saying that there's a glut of one and a dearth of the other.
    - dagenix 7y ago
      By that logic, you could never have an excess or dearth of anything.
ryanmercer 7y ago
>This seems very different from the normal forgery I would expect where the forger gets a large fraction of the bar's value. The only way to make passable fake gold bullion based on weight is to use tungsten clad with gold, and even that is trivial to detect with any proper equipment (which can be hard commercially starting around the cost of an ounce of gold) if the cladding isn't sufficiently thick. Silver is faked way, way, way more wildly. I'm a mod of /r/silverbugs and I've been compiling a list of fakes members of the sub have found over the years, there's some really fake gold in there too https://www.ryanmercer.com/ryansthoughts/2014/8/22/fake-silver.html https://www.ryanmercer.com/ryansthoughts/2014/8/22/fake-silv...
- deleted 7y ago
  [deleted]
- microtherion 7y ago
  > The only way to make passable fake gold bullion based on weight is to use tungsten clad with gold <hat scientist="mad"> Couldn't you, say, mix plutonium with a small amount of lead to dial in the weight you need? </hat>
  - philipkglass 7y ago
    Metallic plutonium is far rarer and more tightly controlled than gold. There is no civilian market for it. Building a new plutonium separation-and-metallization facility for processing spent civil nuclear fuel is more expensive than a new gold mine. Plutonium is also easy to detect by its radioactivity.
    - microtherion 7y ago
      Yes, I know all of that, was just asking why this would be detectible by weight. Picked plutonium for the lulz. It looks like osmium or platinum would be cost effective, at today's gold prices.
      - philipkglass 7y ago
anonu 7y ago
Totally agree. This is more akin to "conflict diamonds" - where the provenance is important. Ultimately, the powers that be want to control the money supply and dollar flows. If gold is coming from an "unauthorized source" this disrupts the stability of the system. I know this sounds a bit "conspiracy theory"-ish but I've come to view the global banking system in such a light: there are a few powerful players (namely the US) that need to know where money is flowing at all times.
- notyourday 7y ago
  That's not the case : people like to say that it is the case but "conflict diamonds" are used all the time, all over. It is the open secret in diamond district in NYC and among the dealers to the stars in LA and European capitals.
notyourday 7y ago
> Then the difference in price must be the small markup that branded stamped gold bars get. The bid/ask spread on the gold bars at the same dealer is close to 30%. The other markup is peanuts. That's why it gold as the "investment" is mostly sold via day time infomercial on second rate TV networks ( the ones that currently broadcast in 480i ) and second rate cable channels as well as promoted by the likes of Glenn Beck right next to "have your own seed bank so you can plant your own garden for food when the economy collapses". JPM made a lot of money serving those outfits but for it gold bar is just a blob of a certain weight and certain purity.
- DennisP 7y ago
  Someone else suggesting gold as an investment is Ray Dalio, who runs the world's largest hedge fund. As part of a portfolio, it helps because it's a largely uncorrelated asset that tends to do well when everything else is crashing. Of course, if you're doing that you're probably going to buying GLD or IAU, which closely track the spot price of gold. Or maybe you'll use an outfit like BullionVault, which has a spread comparable to large stocks, nowhere near 30%.
  - notyourday 7y ago
    > Or maybe you'll use an outfit like BullionVault, which has a spread comparable to large stocks, nowhere near 30%. Which does not provide delivery of the gold bars.
  - DiogenesKynikos 7y ago
    In a negative-interest-rate environment, gold is also more attractive, since 0% interest is better than -X% interest.
- johnrgrace 7y ago
  You are looking at the wrong dealers, the non "scam" dealers for say 1 ounce gold coins have a 3-5% difference between their buy and sell prices. https://www.providentmetals.com/1-oz-us-american-gold-eagle-coin-dates-our-choice.html https://www.providentmetals.com/1-oz-us-american-gold-eagle-...

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phn 7y ago

Would it be feasible to make signed gold bars, verifiable with some kind of public key? Or by inserting all gold bars and their journey on a (perhaps blockchain-like) database verifiable by anyone?

vasco 7y ago
So anyone would be able to know if you have 2 gold bars on your backyard?
moviuro 7y ago
1. Without giving it much thought, it's probably impossible to prevent "replay" attacks. If I have listed tens of valid signatures, I can use them on my new fake bars on the other side of the world, hoping my fake bar with good signature never meets its genuine alter-ego. 2. This sounds sane and feasible, but I'm not sure how anyone would deal with a bar leaving and then re-entering the system. If I'm a jeweller, I might buy a kilobar and melt it for rings, etc. It's inscribed as having left my seller's stock, just as the bar I bought as a random individual. One bar is meant to reenter the market, the other one not so much... how would you deal with that?
- maxerickson 7y ago
  The originator of the bar/signature could track each one and disavow the ones they lost track of. Not a great solution, but it would reduce replay attacks. The jeweler could notify the originator that they destroyed a bar.
  - moviuro 7y ago
    > disavow the ones they lost track of So as an individual, I have to trust the originator to keep the whereabouts of my kilobar private?... This is most probably a very bad idea.
    - maxerickson 7y ago
      Sure, it wouldn't serve all purposes. But for a jeweler that wanted an auditable supply chain, it would be fine. For buyers wanting privacy, the could have a mechanism for the seller to tell them to discard the signature. It makes it useless for future transactions of course, but it would prevent replay up until point.

moviuro 7y ago

If the fake bars still don't meet the purity standard but are getting close (in the article: 99.90, 99.97 or just short of 99.99), maybe up the standard? Jump to 99.995 if technology allows. For banknotes, regular rollout of new formats (shape and shade) helps break counterfeit printers. [0] Maybe push for a new, somewhat different format? [0] https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.en.html https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.e... https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr190528~b1158f43b6.en.html https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr1905...

mruts 7y ago
They do meet the purity standards, that’s the point. A better idea would to put a public key on each gold bar so that anyone can verify the authenticity. The producers could then compile a list of all the current locations of the gold and if someone tries to report a new inconsistent location, flag it as a fake.
- moviuro 7y ago
  I didn't understand that from the article. I understand that while counterfeits are getting better, they are still not perfect imitations. > “The level of counterfeit is becoming really good. Even for us it is hard to tell,” said a Swiss refinery executive who spoke on condition of anonymity. “They are, however, slightly less pure because the people doing the counterfeits don’t have the equipment we have.” For point 2, that's not going to work (copy-paste that key on another bar + zero anonymity or privacy protection + no protection if fake bar is introduced when real bar is out in the wild (in my backpack for example)).
- gwbas1c 7y ago
  > A better idea would to put a public key on each gold bar so that anyone can verify the authenticity Specifically: - Each gold bar has a unique ID, on the bar - A digital signature is made with the private key - The digital signature is placed on the bar - Everyone has to "know" which public key belongs to who (If you put the public key on the bar, then the criminals will just generate their own keys or copy someone else's key.)

tomkinstinch 7y ago

The coolest solution I've read about to note the producer is to emboss a hologram in the metal, though perhaps with enough care this too could be faked or copied: https://en.m.wikipedia.org/wiki/Kinebar https://en.m.wikipedia.org/wiki/Kinebar

ryanmercer 7y ago
There are other methods like this, Sunshine Minting for example has a 'decoding lens' for their products that contain the 'MintMark SI security feature'. http://www.sunshinemint.com/TechnologyEnhancements.aspx http://www.sunshinemint.com/TechnologyEnhancements.aspx --- Geiger Edelmetalle , on their Geiger branded stuff, uses a a UV safety coating but it will rub off with enough handling (which is why many of us do not remove the shrink wrap they put on their bars), they also individually assign serial numbers that can be tracked online for gold and silver bars starting at 1 gram https://www.geiger-edelmetalle.de/en/about-geiger/news/geiger-original-new-product-series https://www.geiger-edelmetalle.de/en/about-geiger/news/geige...
lixtra 7y ago
The coolest solution I heard was to look at a well defined spot of the gold bar and register the impurities/bubbles/structure that naturally happen while casting. This is very difficult to reproduce (because there is no legitimate need to do so) and is already present. Edit: And of course put the info on block chain.

m3kw9 7y ago

The damage is more about criminals getting money laundered and hurting crime fighters and also sanctions

_pmf_ 7y ago

Physical shitcoin.

blobbers 7y ago

The scale of this article seems to not be 'crisis' worthy. Criminal organizations, governments or oligarchs laundering 50 million dollars is nothing new or noteworthy.

lostgame 7y ago
I'd agree - it's not crisis-worthy, but it is at least technically interesting, which makes it alright to be here, IMHO. I've seen a lot of posts on the front page the last few days that seem to be losing technical relevance, or, straight-up just don't even pique my curiosity. I should find another aggregator and try to submit some quality technical stuff the next couple days. :) No point in complaining about something you can help fix.
wiglaf1979 7y ago
Yep. If you do want to hear some 'crisis' worthy numbers in a similar vein as this article I highly recommend giving "Moneyland" a chance. That's where the money laundering gets bumped up into the professional level. I am glad I listen to the audiobook but man is it disheartening to hear how bad it is globally. https://www.npr.org/2019/05/01/719001286/moneyland-reveals-how-oligarchs-kleptocrats-and-crooks-stash-fortunes https://www.npr.org/2019/05/01/719001286/moneyland-reveals-h...
Ellen_Monp 7y ago
Is it just 50 million or could there be more that hasn't been reported? Is the money used to bribe officials, pay for espionage efforts worth $10b? Is a crisis based on the base value or the overall cost that comes from it?

notyourday 7y ago

This entire thing is silly. Gold is a commodity. A gold bar is simply a unit of trade in a specific sub market. There's not enough volume for gold bar trade to be liquid. So gold bar market is a market of mattresses before the ship in a tube mattresses showed up. Dealers that trade gold pretend that Gold Bar X is More Valuable Than A Gold Bar Y which is why it is priced higher. The real reason is that dealer feels the dealer can extract more money from a customer and the dealer happens to have Gold Bar X. Customers of the sucker variety think that by paying for Gold Bar Brand Y more than equivalent Gold Bar Brand X they are getting "more value". The thing is that the spread between bid/ask of a single gold bar is much higher than the delta in price of a Gold Bar X and a Gold Bar Y. This has been the case for at least last twenty years.

gyrfalcon 7y ago

"financiers and regulators as they attempt to purge the world of illicit trade in bullion." Financiers & Regulators trying to control trade... Why not call them what they really are? Fascists

ChuckMcM 7y ago

Not too surprised by this. I have always been curious though about folks who came across gold in one form (like a sunken treasure, or pillaging a museum in a war zone) and wanted to turn it into cash, what prevents them from just melting it down into bars and selling it that way. Saving themselves the step of actually going to a refinery which is going to ask uncomfortable questions seems like a logical step to me.

jimpudar 7y ago
Nothing stops them, it's just that it will be harder to convert into cash than if the gold was stamped. For example, if I take a couple of Canadian Maple Leaf coins to any local "We Buy Gold" shop, I'll get very close to spot price in cash with no questions asked. The fact that they clearly came from the Canadian mint tells the dealer that they can trust they are indeed made of 99.99 pure gold. If I come to the same dealer with a bar of gold I melted and poured myself, they may need to send it out to a lab for analysis to determine the purity, actual weight, if I'm ripping them off, etc.

qwerty456127 7y ago

What the heck does the world need gold bars for if these are not allowed to be traded freely without being legitimately stamped with the logos of major refineries? If gold still has to be controlled this way, why not just issue some kind of global money instead and stop drilling Earth for this? Also, what distinguishes a warlord from an ordinary dictator which still is allowed to use gold?

syshum 7y ago

Why is that an issue? I am sure I will get downvoted to hell here because HN is full of Authoritarians, but money "laundering" should not even need to be done, I should not have to have a Special stamp to trade gold, or report money transfers to the government, etc It is a prime example of government creating a problem (a black market) for things that should not be illegal in the first place (drugs and other items), then having new laws that infringe further on peoples freedom to "solve" the problem which itself creates even more problems

jonfw 7y ago
Would you agree that money laundering is an issue when politicians have to conceal bribery?
- syshum 7y ago
  Political Bribery is a symptom of too much consolidation of power, and/or too much power in government in general Systems of distributed power, with robust checks and balances are the solution to political corruption, not authoritarian money laundering laws
  - mc32 7y ago
    Im not sure that’s a hard rule. China strong power consolidation, India is more distributed and the central gov is relative to China weaker, but while both suffer forms of corruption, India is above and beyond what you’d experience in China, from talking to folks familiar with both places.
    - syshum 7y ago
      I am not really familiar with India's government but I suspect they suffer from the same problem that hard core "States Rights" people in the US Suffer from When I say Distributed power, with Checks and balances, that does not simply mean small regional Fifedom's with unlimited power. I suspect India's weak central government has limited power over the local regional governments making them very corruptible. "Distributed power" is not synonymous with "small regional power" One of the things the US gets right is neither that state nor the federal government is "more powerful" than the other, each have their place, and both can in different circumstances overrule each other, this has the benifiet of ensuring States do not go crazy with power and corruption, and that the feds do not go crazy with power and corruption Over the last 200 years however we have consolidated ALOT of power into the Federal government, this is making things very very bad if you enjoy and prefer an individualist society with personal liberty

chiefalchemist 7y ago

> "The fakes are hard to detect, making them an ideal fund-runner for narcotics dealers or warlords." Or human-traffickers. Or just about any nefarious agent. At some point, we need to look beyond the Hollywood cliches.

tim333 7y ago
Indeed sounds here that the main use is avoiding capital controls in China and similar. I'm not sure that's even breaking the law once the things are outside China.

logfromblammo 7y ago

Pecunia non olet. Gold has no smell. If the bars are genuinely made of gold, and of the advertised weight and purity, they are not counterfeit. The quantity of metal is the only thing that matters. If anything, the problem is the attempt to shoehorn provenance information into what is clearly a money commodity, and one that loses its individual identity every time it gets re-melted. Just let it go, man. You can't track all the money on the planet all the time. If this is a problem, the only solution is to demonetize gold and replace it with a trackable, traceable substitute. And good luck with that. You'd be replacing trust in chemistry and physics with trust in the money-tracers.

tuberelay 7y ago

How do they know that these bars don't have 10% tungsten content deep inside? Have they drilled them?