Direxion Daily Gold Miners Be (DUST)

[TheSittingtight1]

J, 95% of the people have NO idea what the hell BRICS is about... Here is a report of pissing THEM off......and part of the reason BRICS will be The only force against the IMF/Federal Reserve....

http://www.forbes.com/sites/timworstall/2012/03/26/the-drilled-gold-bars-filled-with-tungsten/


The Drilled Gold Bars Filled With Tungsten

I have to admit that I really do like this story. Over the weekend there’s been some rather breathless speculation about how a gold bar has been found, one that has been drilled out and filled with tungsten. Given that I’m actually in the metals trade, albeit not bullion or tungsten (I have handled both but they’re not my specialty) I thought I’d have a closer look.

The first mainstream report that I saw was by Felix Salmon at Reuters. And there’s two parts to that story.

Firstly, I wouldn’t be surprised if someone has attempted to do the substitution. It’s been known for a long time that the densities of tungsten and gold are close enough that in theory, drilling out a hallmarked gold bar and replacing the interior with tungsten could fool all but the most sophisticated of tests.

You can see the purported photos of the bar that has been found here. Following the story around the claim is made by ABC Bullion that a Swiss refiner (and producer of good delivery bars to the London gold market) MKS had sent out the warning email last week. Which, at least as of lunchtime today was something of a surprise to MKS as when I spoke to them they had no idea about it all. There were quite a lot of people like me asking about it but they had no idea whether the story was true, whether someone in their company had sent it, no real idea of what was going on at all. They were quite mystified in fact.

But as I’ve said, in theory this sort of thing is possible even if it would be very difficult to do in practice. Further, I’m not really sure that the economics of it quite work out either. Sure, tungsten is vastly cheaper than gold but this would be very skilled work with a low success rate and the gross profits are a few thousand $ per 1 kg bar so treated. It’s most certainly not a 5 minute job either. Nor mechanisable. Just not sure that it would be worth it.

Where the story goes off into fantasy though is here (and Felix is correct in the questions he asks to try and work out prevalence):

If there are 1.3 million salted 400 oz bars in existence, and each one is 75% tungsten, then that makes 390 million ounces of gold which in truth isn’t there. At $1,660 per ounce, that’s over $600 billion which people think they own but don’t. To put that number in context, it’s roughly half the total quantity of subprime mortgages which had been issued at the height of the housing bubble.

The answer to this comes from a commenter there:

The amount of turnover in the market is much higher than you think. In the case of the professional market which deals in 400oz bars, yes many of these sit in central bank vaults but many others are held by private investors and these are traded. There has been no occurrences in my 18 years in the industry, and I haven’t heard of others, of fake 400oz gold bars. Any bar coming out of a LBMA accredited refinery can be trusted because the refinery cannot control or know where the bar will end up and during its life there is a good chance a bar will eventually be melted for use by a jeweller or other refiner and as such there is a high probability of being caught out.

In the retail market I’d guess that turnover is a lot higher, particularly as retail investors do tend to exhibit herding behaviour, which means when there is selling it usually overwhelms retail buyers at that point in time. The end result is that in a net selling situation dealers do not sit on gold due to the high holding costs vs low profit margins and uncertainty as to when buying demand will return, so they liquidate that net selling excess back to refiners, where it is melted. Thus there is a fair bit of turnover and again, a good chance of fakes being detected.

I would take that even further. Even the ingots in central banks, or in gold vaults, sometimes get sent off to be refined. For the very same reason those vaults are regularly vacuumed for the trace amounts of gold that have rubbed/been chipped off the ingots. It’s absolutely true that gold doesn’t oxidise or decompose, but as bars are moved around then they inevitably get bumped and after enough of that they are likely to get sent of for refining so as to maintain their good delivery characteristics. And no, a tungsten filled bar would not be refined without someone noticing.

If I were to assign percentages here I’d say that someone trying to drill out a bar and fill it with tungsten would be up near 100%. I’m sure the idea has occurred to lots of people independently. As to this being a common occurrence among good delivery bars I’d put it down somewhere near zero. There’s just too much turnover of bars through the refineries for this to be possible.

Update: I should have added that the first people to raise concerns about the veracity of this story were the guys and gals at the Screwtape Files. As to who was first to find out about MKS, well, by the time I phoned them at lunchtime (European time) Monday they were already obviously bored with answering the questions so I know I wasn’t first to do so even if I did do so.

FUCKING RELY There is more just tired and the bet was against me....

http://www.whiteoutpress.com/articles/2015/q1/germany-tests-us-stored-gold-says-no-tungsten/


February 19, 2015
Germany tests US stored Gold, says no Tungsten

By Mark Wachtler

February 19, 2015. Frankfurt, Germany. (ONN) For the past 15 years, a rumor of global proportions has been spread that could collapse economies, destroy countries and even start World War 3. Since the Clinton administration, some have speculated that the US government replaced some portion of the nation’s gold stored at Fort Knox with gold-plated tungsten bars, comparatively worthless. The rumor grew to include the gold owned and stored by other nations in the US, most especially Germany. German officials just reclaimed some of their gold, tested it and confirmed they were all pure gold.
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Rumors of counterfeit gold bars aren’t rumors but fact. The question is, how widespread is the problem and who’s been victimized. Image courtesy of BullionStacker.com.
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2010 - the story begins

While the rumor of counterfeit gold bars filling America’s vaults has been around since the mid-1990’s, it wasn’t until 2010 that reputable sources, including licensed precious metals dealers and global banks, began confirming that counterfeit gold-plated tungsten bars had in fact infiltrated the highly regulated international gold market.

As detailed by CoinUpdate.com in a 2010 report, four counterfeit gold bars had been received by the Chinese central bank from the United States. Chinese officials didn’t publicly confirm that rumor, at least that we could find. But at the same time, a German TV news network broadcast a story from a reputable German gold foundry. The smelting plant’s 30-year owner told the news outlet how one of his workers pointed to one of the gold bars the foundry regularly receives. He insisted something wasn’t right about it.

The owner explained that he trusted his longtime employee’s gut instinct and they cut the bar in half. They were shocked to find the bar filled with worthless tungsten instead of pure gold. “The old fox was right,” the owner said after their horrifying discovery. Watch the German telecast via YouTube. The foundry’s owner went on to explain that it wasn’t he who was defrauded, but a German bank that purchased the gold and sent it to the foundry to be melted down and minted into larger bars for storage.

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Debunking the debunkers

With a sudden whirlwind of near-panic over the possibility that the world’s gold could really be worthless tungsten plated with a thin layer of gold, a handful of individuals attempted to discredit the story. They couldn’t. One attempt came from The Market Oracle in the UK that claimed the news about gold-plated tungsten bars was a lie. They called it the, ‘Fake Gold Plated Tungsten Story’.

But upon reading their argument as to why they feel the stories are ‘fake’, the author actually admitted that the stories are fact. Their flawed reasoning being that the gold-plated tungsten bars sent to China from the US were giant 400-ounce bars. And the much smaller counterfeit gold bars found in Germany were only 500-gram bars. Therefore, since the counterfeiting involved two different sized bars, both stories had to be fake.

Counterfeit gold bars found in New York

Jump two years to 2012 and another high profile case of counterfeit gold-plated tungsten bars being discovered among the world’s most reputable gold dealers. This time the scene was New York City’s diamond district in Manhattan. There, a registered, licensed New York gold dealer acquired four ten-ounce pure gold bars for roughly $100,000.

The store owner says he was recently told about the counterfeit gold rumors by a friend and he decided to test his own gold himself. He placed one of the bars under a drill press and drilled a hole in the soft metal. He was shocked to see the bar was nothing more than a block of gray metal with a thin foil-like wrapper of gold around it. It was another counterfeit gold bar.

“I got sick,” the man told the local Fox News affiliate when he discovered he’d been sold counterfeit gold, “It’s a big amount of money.” The New York branch of the Swiss bank that sold the fake gold bars says it reported the incident to the FBI. The news account went on to confirm that counterfeit gold bars were also discovered in the UK. In the British case, the thieves drilled numerous tunnels through each gold bar, kept the gold shavings and filled the spaces with tungsten.

In the NY incident, the perpetrators were much more sophisticated. They acquired registered gold bars, complete with serial numbers stamped on them. They then plated tungsten bars of the exact same shape and weight with a thin layer of gold and re-stamped them with the original logo and serial number. It’s that last aspect that is putting fear into many central banks. The counterfeit gold bars in both Germany and the US came from official foundries and banks - the same foundries and banks that central banks get their gold from.

Germany tests its US gold

Flash forward to last month when Yahoo News and AFP reported that Germany has not only increased its repatriation of gold from the US back to Germany, but it tested the last shipment from America to insure it wasn’t counterfeit. “The Bundesbank successfully continued and further stepped up its transfers of gold,” the German central bank said in a statement, “In 2014, 120 tons of gold were transferred to Frankfurt from storage locations abroad: 35 tons from Paris and 85 tons from New York.”

The report credits Germany with having the second-largest national reserve of gold in the world, behind only the United States. Germany owns 3,384 tons of gold and stores it in Western countries for safe keeping, a tradition that began after World War 2 and continued through the Cold War when half of Germany was occupied by the Soviet Union.

Currently, of Germany’s gold stored in other countries, 1,447 tons are at the Federal Reserve Bank of New York. 438 tons are at the Bank of England. And 307 tons are stored at the French Central Bank in Paris. According to German plans, the country intends to bring home 674 tons of gold by 2020 and settle with half stored inside Germany and the other half still kept in foreign countries.

Upon receipt of another shipment of gold from the US, German officials casually mentioned that they inspected the gold to insure it wasn’t counterfeit. “Implementation of our new gold storage plan is proceeding smoothly. Operations are running very much according to schedule,” Bundesbank’s Carl-Ludwig Thiele announced, “We also called on the expertise of the Bank for International Settlements for the spot checks that had to be carried out. As expected, there were no irregularities