Fake-branded bars slip dirty gold into world markets

[figmentofmyass]

the headline and "forgery" lede are a bit misleading, as the fraudulent gold bars bleeding into the market are in fact real gold. the purpose of counterfeiting in this case is to launder money by procuring and selling bars that look like they were produced at the world's major legitimate refineries.

the counterfeits are good enough that they've been found in the vaults of jpmorgan chase. i guess gold is pretty good for moving/laundering money after all!

LONDON (Reuters) - A forgery crisis is quietly roiling the world’s gold industry.

Gold bars fraudulently stamped with the logos of major refineries are being inserted into the global market to launder smuggled or illegal gold, refining and banking executives tell Reuters. The fakes are hard to detect, making them an ideal fund-runner for narcotics dealers or warlords.

In the last three years, bars worth at least $50 million stamped with Swiss refinery logos, but not actually produced by those facilities, have been identified by all four of Switzerland’s leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion, said senior executives at gold refineries, banks and other industry sources.

......

Fake gold bars - blocks of cheaper metal plated with gold - are relatively common in the gold industry and often easy to detect.

The counterfeits in these cases are subtler: The gold is real, and very high purity, with only the markings faked. Fake-branded bars are a relatively new way to flout global measures to block conflict minerals and prevent money-laundering. Such forgeries pose a problem for international refiners, financiers and regulators as they attempt to purge the world of illicit trade in bullion.

High gold prices have triggered a boom in informal and illegal mining since the mid-2000s. Without the stamp of a prestigious refinery, such gold would be forced into underground networks, or priced at a discount. By pirating Swiss and other major brands, metal that has been mined or processed in places that would not otherwise be legal or acceptable in the West – for example in parts of Africa, Venezuela or North Korea – can be injected into the market, channeling funds to criminals or regimes that are sanctioned.

It is not clear who is making the bars found so far, but executives and bankers told Reuters they think most originate in China, the world’s largest gold producer and importer, and have entered the market via dealers and trading houses in Hong Kong, Japan and Thailand. Once accepted by a mainstream gold dealer in these places, they can quickly spread into supply chains worldwide.

......

“It’s a wonderful way of laundering conflict gold,” he said. “The gold is genuine, but it’s not ethically sourced ... They look completely genuine, they assay correctly, and they weigh correctly as well.”

The perfect appearance makes the bars highly effective. “Because gold is completely fungible,” Hayes said, “you can bleed it into genuine production. It’s very, very hard to control.”

J.P. Morgan supplies gold from major refiners for many of the world’s biggest banks, jewelers and investors, and the discovery of the forged bars in its vaults triggered a full review of the gold it held, market sources said. One said this sweep unearthed around 50 fraudulently-branded bars. Another said it found several hundred. J.P. Morgan did not comment.

https://www.reuters.com/article/us-gold-swiss-fakes-exclusive/exclusive-fake-branded-bars-slip-dirty-gold-into-world-markets-idUSKCN1VI0DD

[1Referee]

In this case it might be actual Gold still, but more closer to the retail market, there have been a shitload of Asian fake Gold bars that flooded the market. Kilo bars with tungsten in the center have been sold to a lot of people throughout the last years. People don't realize what they have until they sell their Gold, which we will definitely hear more about now Gold is going through a bullish run itself.

It's a tough position to be in if you're heavily into Gold. I know someone who's frequently trading gold bars and coins back and forth, but only does so when both parties agree to meet up in a shop that has been known to have years of experience and an x-ray metal analyzer to accurately know what the consistency is of the pieces they bring in.

[mu_enrico]

Wait what? I just know that there is such thing as "major legitimate refineries." In that case, isn't it still worth the same?
I thought gold is fungible.

I think fake (cheap metal) gold is much more common than the previous one. I only know to buy gold with a certificate of authenticity from a local reputable company. Damn, should study more.

[davinchi]

If even gold is getting this type of scamming then there is really no point on not going over to blockchain route for everything. If you could just put up like a qr code deal or just some numbers that represents wallets or address on gold bars you can just check those gold bars on each time someone sell it and you can see where it was gotten from. That way if the company that got mimicked by the scammers (I know gold were real gold but the reputation was stolen) they would be able to refute or agree what has happened was actually what happened.

Otherwise we will keep having these type of stuff in all investment stuff, blockchain literally makes sure the owner is the correct one with many stuff like signatures and all which is the exact reason even cash should be tied to blockchain with their numbers.

[Rustamm]

A good option for money laundering and the sale of illegal gold, sooner or later it should have surfaced. By the way, this is a good argument in favor of the value of Bitcoin, because it can not be faked, filled with something and presented instead of the original, as was done with gold, filling it with tungsten.

[The Sceptical Chymist]

the counterfeits are good enough that they've been found in the vaults of jpmorgan chase. i guess gold is pretty good for moving/laundering money after all!

Christ, this is always what's scared me about buying gold or silver--it doesn't matter if it's a bar or something like an American Silver Eagle, there are counterfeits floating around that could fool anyone.  I definitely would trust big retailers who sell gold or silver straight from the mint, but I became way too paranoid about fakes early on.  I'm a bit surprised that JP Morgan got fooled, though.  You know it's bad when crap like that happens.

By the way, this is a good argument in favor of the value of Bitcoin, because it can not be faked, filled with something and presented instead of the original, as was done with gold, filling it with tungsten.

I would agree with that 100%, except that they're completely different things.  Bitcoin is not a hedge against inflation, isn't a safe-haven asset, and can't be made into a nice piece of jewelry.  Other than that, you're correct--no fake bitcoins are running around trying to pass themselves off as the real deal.

[Lucius]

Those who support Bitcoin now have an additional reason to say that crypto is better then gold, just for reason Bitcoin can not be faked in any way except in the case of forks which misleading people to buy some much cheaper coin.

Now we learn that there is gold which we can call legal, and one that comes to the market through illegal channels. For world who wants to have full control in everything nothing can work that way, everything must go through official channels. But what about silver, precious stones, works of art or food, illegal trade and fake things flooded the world to the point that it became a common thing.

Other than that, you're correct--no fake bitcoins are running around trying to pass themselves off as the real deal.

Except several dozen of forked coins, who each claim to be the real Bitcoin.

https://www.forks.net/list/Bitcoin//1/2017-01-01/2020-01-01

[audaciousbeing]

This alone is a slap on gold itself as a precious metal because this is just showing that it can be adulterated and when that happens, the end is closer than before. I wonder how possible it is to have a fake bitcoin mined from whatever place the adulterated personified individuals might want to go get one and that is an advantage I am seeing here that bitcoin has over gold and comparing them is even out of place.

[kryptqnick]

If even gold is getting this type of scamming then there is really no point on not going over to blockchain route for everything. If you could just put up like a qr code deal or just some numbers that represents wallets or address on gold bars you can just check those gold bars on each time someone sell it and you can see where it was gotten from. That way if the company that got mimicked by the scammers (I know gold were real gold but the reputation was stolen) they would be able to refute or agree what has happened was actually what happened.

Otherwise we will keep having these type of stuff in all investment stuff, blockchain literally makes sure the owner is the correct one with many stuff like signatures and all which is the exact reason even cash should be tied to blockchain with their numbers.

QR code also seems like a good idea to me. I suggested it a while ago when people were discussing whether fiat can be made so that it's impossible to fake it. Cryptos are indeed not to blame for money laundering activities. There's been various research showing that banks launder more money than cryptos (actually, this one is simply a fact) and that terrorists prefer fiat for now. Cryptos are associated with cybercrime, but it's also growing regardless of the usage of Blockchain, just because of the general advancements in tech. It's just easy to blame cryptos as something new and suspicious, and it's also an attempt of the old institutions to survive by accusing the new thing of having negative impact.

[BitHodler]

It's funny how when there is something negative going on in the precious metals world, JPMorgan's name always pops up. It wouldn't surprise me if they have something to do with this.

Every central bank has a database of the serial numbers of each gold bar that they own, yet duplicates managed to sneak their way into their reserves. This to me looks like this shady activity is purposely condoned.

I find the reaction of people trying to poke fun of gold not really justified. They act like the bars are not real gold but that's not the case. All bars are 99.99% pure gold-- just the brand stamps are manipulated.

[hatshepsut93]

the counterfeits are good enough that they've been found in the vaults of jpmorgan chase. i guess gold is pretty good for moving/laundering money after all!

This is why Bitcoin will never be hugely popular for money laundering, it leaves a trace that will stay there forever, waiting to be untangled, but with physical things like gold or fine art or cash, all traces can be erased. And in Bitcoin it's much harder to obfuscate large transaction.

Other than that, you're correct--no fake bitcoins are running around trying to pass themselves off as the real deal.

Except several dozen of forked coins, who each claim to be the real Bitcoin.

https://www.forks.net/list/Bitcoin//1/2017-01-01/2020-01-01

You need the tiniest bit of Bitcoin knowledge to tell the fakes from real Bitcoin, while with gold only specially trained experts can do it.

[figmentofmyass]

the counterfeits are good enough that they've been found in the vaults of jpmorgan chase. i guess gold is pretty good for moving/laundering money after all!

Christ, this is always what's scared me about buying gold or silver--it doesn't matter if it's a bar or something like an American Silver Eagle, there are counterfeits floating around that could fool anyone.

at the end of the day, you've got kilo bars of pure gold in your hands either way. if a counterfeit is good enough to be fungible, who really cares? i have a certain appreciation for people who can beat the system.

there's a parallel to bitcoin here. some people are seeking out "legit" bitcoin and will pay a premium for it---like freshly mined "virgin" coins or coins auctioned off by the USA government. they avoid exchanges, mixers, and other services because they don't want "tainted" coins. just like gold custodians don't want "tainted" gold.

at the end of the day, i'd rather everything be fully fungible. lack of fungibility only hurts little guys like us. if it's real gold, or my node says it's real bitcoin, that's good enough for me. and i wish that were true for everyone else. that would be a truly free market.

[guoyu78]

This fake gold is more common in Asian country, especially china, I am even surprised that Japan is involved also because I know japan to always be after quality which is why they have one of the best quality technology from Japan.  I do buy some gold a lot from chine, some of them are actually gold, but with a very thin layer and as the article said here, they are almost more of metals, but the ones that I buy are more of metals.

I know that it could be legal sometimes because gold is divided into 10k, 14k, 18k and 24 karat, I think the 24 karats is actually what is meant to be used for gold bar and if anyone is selling anything less than that is probably practicing a fraudulent business. I think is better if people transact more on digital gold, which is safer than the physical gold.

[CryptoBry]

I am amazed with this story. Right now, there is a growing demand of gold as it is originally the safe haven in times of distress and chaos. The perennial demand for gold has been the very reason why unscrupulous personalities can be engaging in fake gold and even use gold to launder illegal money. So it is not anymore true to say that it is Bitcoin that is facilitating money laundering as any asset digital or not can be utilized for this activity.

[dothebeats]

Wait what? I just know that there is such thing as "major legitimate refineries." In that case, isn't it still worth the same?
I thought gold is fungible.

That's what a lot of people thought, too. Just because gold came from legitimate sources doesn't mean the gold per se is legitimate; there are still some that passes through inspection and sometimes, what they give you isn't pure gold and there are some elements added to it to attain that mass. Even if you have the paperwork, if you were given gold with some % of it being mixed with other metals, you are not holding an authentic gold at your hands.

I think fake (cheap metal) gold is much more common than the previous one. I only know to buy gold with a certificate of authenticity from a local reputable company. Damn, should study more.

Yep, and gold with cheap metals embedded within it has been more and more common in contemporary times knowing that security protocols and ways to detect gold hasn't changed much since forever. The gold market is a scary place to be in, especially those people who are not so meticulous in what they buy.

[Febo]

I am amazed with this story. Right now, there is a growing demand of gold as it is originally the safe haven in times of distress and chaos. The perennial demand for gold has been the very reason why unscrupulous personalities can be engaging in fake gold and even use gold to launder illegal money. So it is not anymore true to say that it is Bitcoin that is facilitating money laundering as any asset digital or not can be utilized for this activity.

Bitcoin was never used much for money laundering. Its transparent ledger makes it extremely hard to hide your wealth in it. The only advantage I see it have is easy to transfer on other side of world, but you simply cant hide it or spend/exchange that easy.

[stompix]

Those who support Bitcoin now have an additional reason to say that crypto is better then gold, just for reason Bitcoin can not be faked in any way except in the case of forks which misleading people to buy some much cheaper coin.

Now we learn that there is gold which we can call legal, and one that comes to the market through illegal channels. For world who wants to have full control in everything nothing can work that way, everything must go through official channels. But what about silver, precious stones, works of art or food, illegal trade and fake things flooded the world to the point that it became a common thing.

Unfortunately, this happens to bitcoin also, even without regulations.
So-called "virgin" or "clean" coins, newly generated coins that are purchased directly from a miner sell at a premium, sometimes even at 20%-30% if we believe some claims which is a bit too much in my opinion but I'm certain that they are at least 5%-1% more expensive than the exchange price.

I find the reaction of people trying to poke fun of gold not really justified. They act like the bars are not real gold but that's not the case. All bars are 99.99% pure gold-- just the brand stamps are manipulated.

Yeah, people should really pay a bit more attention, and the OP did mention it.
It is not about fake gold making its way into JP's safe vaults but real gold with fake date and location of birth  
It's not like an adibas or nykey rip-off and more like Huawei claiming its phones are made in the US.

Seriously, does anybody care is the gold is from Australia or Somalia, if your gas is from Irak or Norway?
As long as it works and it's cheaper...less than 1% care about the origin.

[ene1980]

the fraudulent gold bars bleeding into the market are in fact real gold. the purpose of counterfeiting in this case is to launder money by procuring and selling bars that look like they were produced at the world's major legitimate refineries.

There are many illegal mining fields when it comes to gold in Africa and South America and all of these comes into the market, they are making replica logo to infiltrate the market and it is not that easy to stop these flow of illegal gold in the market. Glad to see these kind of topic when everyone is going after bitcoin and this market to see these kind of news  .

the counterfeits are good enough that they've been found in the vaults of jpmorgan chase. i guess gold is pretty good for moving/laundering money after all!

This happens when they start shitting bitcoin, Karma hits hard in their arse  .

[Thirdspace]

It is not about fake gold making its way into JP's safe vaults but real gold with fake date and location of birth  

yes that's correct and unfortunately some people in this thread totally misunderstood the idea
OP clearly explained, the gold bars are real gold metal but the markings are fake (forged)

on the topic, I understand the reason behind this is to launder conflict gold
or maybe even to purge stolen gold by melting and (fake) re-stamping to make it legit
but I don't get how it is being used to launder money
aren't gold producers/dealers/trading houses keeping records of their customers?

[exstasie]

but I don't get how it is being used to launder money
aren't gold producers/dealers/trading houses keeping records of their customers?

Organized crime syndicates are pretty good at procuring fake ID and spinning up shell companies. Any syndicate that can make counterfeits this good are highly sophisticated.

The counterfeits are also so good that any dealer would have plausible deniability. Talk to the right dealers and offer the right kickbacks in Hong Kong or Thailand and you might find the right help to get your gold into circulation.