Monday, March 26, 2012

Screwtape Files Trips Over Gold/Tungsten Story

Update (29/3): Since posting this article a few days ago there has been quite a lot of coverage on blogs and even mainstream news sites as well. I thought it would be prudent to notify readers that there have been a couple of updates to the original Screwtape Files post and it reads that there are inconsistencies with the Tungsten filled Gold bar story (see their updated post here to judge for yourself and read the comments that follow the post).


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Most readers would probably be familiar with the story that hit the blogosphere over the weekend, ABC Bullion posted photos of a Gold kilo bar which had the insides drilled and 5 tungsten rods inserted.

Here are the pictures (click images to enlarge):


A description of the story was provided as per below:
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.
Stories have circulated the net for years about tungsten filled Gold bars, including allegations (usually in jest) that Gold stored by the Fed is tungsten filled. Of course most of these allegations are just that, but the evidence provided above by ABC Bullion is one of the few legitimate looking occurrences I've seen.

Jeanne d'Arc of Screwtape Files decided to cover the story from a skeptical point of view (I'm actually a fan of the site, so although IMO they've slipped up on this occasion it's worth subscribing to their posts). Here is some of the analysis posted:
As can be clearly seen, a section is 'missing' from the 'salted' bar, left. This missing section is shown on our comparative bar, between the two red lines. The only logical explanation would be if the bar had been horizontally cut in half twice, with the missing section not appearing in the photograph. This section amounts to around 7% (I estimate it to be 6.8%) of the bar, or a hefty $3,600 dollars worth.
A reader "Prize Fighter" on the Screwtape Files blog posted:
I don't see a missing section in the cut bar. It may appear missing if you're looking for a clean cut but it wasn't cut or sawed, it was sheared with snips. That is obvious.
Gold being the soft metal it is, using shears to cut it in half would deform and stretch the material into rounded camber edges. So some of your "missing" material has actually been stretched down into the cut. It seems as obvious to me as your assertion is to you.
I agree. It is obvious from the photos that it's not a clean cut and the soft Gold has been stretched and angled down into the cut. Jeanne d'Arc responds to this commenter "tungsten, being the hard metal it is, cannot be deformed and stretched into rounded camber edges in such a manner" but it's very clear to me that while the Gold has stretched, the tungsten rods appear to have "snapped" in the cutting process and have not rounded like the Gold.

The article continues:
Further, if one looks at the pictures on the websites (it's easier to see there than here), then it appears that in one of the photographs there are five tungsten rods, equally separated, whereas in another photograph only the right three are clearly visible: the left two seem to be either 'blurred out' or just not there.
It's true the tungsten rods are not as visible in the top half of the bar that is presented, but rather than "blurred" as has been suggested by Jeanne d'Arc it appears to me that the gold has just stretched over the other two rods in the cutting process.

The article then goes on to attack ABC Bullion's blog (in an almost comical fashion they try and suggest there is a conspiracy and the blog was created especially for Silver Doctors):
The source for the story, according to Silver Doctors, is the ABC Bullion Blog, which appears to be the legitimate blog of the ABC Bullion Company. Now this blog seems to have two sites: the first is on the company's main website (here) and the second is on a Google Blogspot site. The 'articles' are identical on each, and are the same rather poor set of clipped videos and bullion pump propaganda that one finds everywhere on the net.
Two things stand out. First, neither blog has an article dated older than 22 March (coincidentally, the date of the salted gold story). Second - and this is really odd - you can't get direct access to this big story about the salted gold from either blog version. Honestly! You have to click the Silver Doctor link to get access to the page in question, or click on a tiny, almost hidden, link in their introduction to a paste of a Brother JohnF silver update. So, what we seem to have here is a blog that is launched for an Australian bullion dealer, which has stuck a few random videos and links up, and has 'coincidentally' passed this big scoop of a story to Silver Doctors to get a massive amount of hits. Or, it has passed the story to Silver Doctors and then retrospectively constructed a blogsite to give the impression of a legitimate blog. Either way, they've done a piss-poor job of it...
Jeanne d'Arc is right about their main site, it doesn't have blog articles dated back very far (but this looks by design rather than a conspiracy). It looks to me like they just feed the most recent articles from the blogger hosted blog to their main bullion selling site. It's claimed above that neither site has articles dating earlier than 22nd March, but a quick search in Google "site:ausbullion.blogspot.com" shows posts on the blogger site dating back to mid 2010. 

For a blogger who sees himself as a skeptic he's sure doing a good job finding a conspiracy where there is none. It was not "passed on to Silver Doctors" or any other site, it was simply posted in the same fashion as they've been doing for the past 2 years. Granted the blogger site could do with some navigation improvements such as a calendar of posts, however ironically the Screwtape Files blogger site suffers from the same lack of functionality.

Jeanne d'Arc finishes his "exposé" with the following:
Finally, the story itself does not make sense. Apparently a British scrap dealer came across this bar, and then he sent the photographic evidence to his 'client', ABC Bullion. What is a scrap metal dealer doing buying 1 kg gold bars? Did someone chuck it out with their rusty garden tools and their 30-year old Morris Minor? And, more to the point, what is ABC Bullion - a supposedly respectable Australian bullion dealer - doing sourcing its gold bars from British scrap metal dealers?
The photos, the blogsite, and the story, are all so fishy that I'm afraid I have to award this 'story' a big "F". It's not the gold that has a rotten core, it's this shameless bit of nonsense.
It is not explicitly stated that the original source of the email and the supplier are one and the same (and this is further clarified by ABC below). Furthermore a scrap precious metals dealer will buy whatever comes across his counter, I'm sure he wouldn't turn down a kilo bar if presented with the opportunity to purchase. I award this Screwtape Files analysis a big "F". It's one of the most bizarre, misleading and factually incorrect posts I've seen on their site. Usually their articles are very good so it was a shame to see this story posted.

Greg Hudson (aka Tears of the Moon who updates the ABC Bullion blog) provided some further details on Silver Stackers where the story was also linked by a member:
Hi all, thanks for your discussion on my recent post. The warning email and pics were sent to ABC Bullion from MKS (PAMP refinery www.mks.ch). Not sure if the email was sent to other Australian dealers as ABC Bullion is the sole licensed importer of PAMP for Au, NZ. 
As per the comments above 2g is a huge difference. As a demonstration to myself I weight two 1kg ABC Bullion brand gold bars that had just arrived from the refinery last Friday and 1 weighed 1000.01g the other 1000.02g. 
Whilst we all would like to draw links (myself included) to grand schemes of high finance I suspect the bar in question was the product of a criminal gang. 
They most likely bought a real bar with certificate, clamped it in a drill press, drilled out 5 holes and pushed in tungsten rods. The hardest part would have been convincingly resealing the drilled end with melted gold from the drill holes. 
Whilst I suspect this was not a once off it would certainly be rare. As most gold bought back by dealers (and all bought by scrap dealers) ends up getting re-refined or sold to manufacturing jewelers, if there was a large number of such bars we would be hearing about it on a regular basis as the bars were melted down.
Greg Hudson - ABC Bullion - www.abcbullion.com.au
The story and pictures make this story look genuine, although as pointed out by Greg above it's likely a rare occurrence.

A kilo of Gold is more than most of us have to spend in a single purchase. So in some ways purchasing smaller bars is probably safer even though we pay a higher premium for the privilege.

My advice would be to purchase your Gold in the following forms:

CertiCard Packaged Bars: While I'm sure they are not infallible the packaging on CertiCard bars provides an extra layer of complexity for those attempting to counterfeit or tamper with Gold bars. Perth Mint and PAMP both sell products in this packaging. Furthermore their smaller size (sold in 1g to 100g sizes) makes them small enough that inserting Tungsten rods would be almost impossible.

Gold Coins with milled edge: As Gold Pelican points out on Silver Stackers this form of Gold even in a kilo size would be extremely difficult to cover as the holes created in the milled edge would be a dead giveaway.

Also make sure you are purchasing your Gold and Silver from a reputable dealer/distributor. Look for those who are sourcing their product direct from official suppliers. Here's hoping this tungsten filled bar was just a rare find.


BB.

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3 comments:

  1. Yeah, I'm starting to not trust anything posted on SilverDoctors site.

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  2. There is a lot of rubbish posted on precious metals news sites and blogs, so it's definitely a good thing that we have sites like Screwtape Files who look at new developments skeptically.

    ReplyDelete
  3. Maybe you'll prefer our new scoop here ;-)

    ReplyDelete