How widespread are fakes?

All this power fits right in your pocket

Sure, fake gold is readily available, highly realistic, and easier than ever to purchase. And yes, news stories pop up all the time about the latest stash of gold-plated tungsten to be discovered on the market. So it really begs the question, does anybody out there know precisely how widespread this epidemic of fraud really is?

Nobody knows. That’s the tl;dr version, of course. Which is to say that there’s no government agency/corporate consortium/academic lab tracking any tangible data. But what if we want to dig a little deeper? Is there any way to try to quantify, say, the odds that any random you buy will turn out to be a forgery? 

Let’s start by thinking about the economics of crime. Namely, the cost and the benefit. Because it stands to reason that the greater the benefit of committing a crime, and the lower the cost, the stronger the incentive will be.

Now the benefit, in our case, is fairly straightforward to calculate. On a per-coin basis, one is buying a convincing gold-plated tungsten slug for $500 and selling it for roughly $2400, for a net profit of $1900. Naturally, this does not capture the full benefit of the crime, because there’s simply no limit to how many coins can be sold (unless you’re selling so many fakes it actually affects the price of gold - which I’ll save for a later post). So in theory, at least, the benefit is infinite.

The cost on the other hand is a little bit more difficult to quantify. We’ll start with the length of time spent behind bars. Now, prison sentences can vary quite a bit for counterfeiting, but as a first-order approximation, we’ll use a recent case in Georgia as a guideline and say 15 years. 

The cost per year is, as you can imagine, highly subjective. The state of Texas, for example, offers compensation of $80,000 for every year of false imprisonment. In Massachusetts, on the other hand, it’s $1,000,000 per year. For the sake of argument, we’ll say this is a Boston based crime, which brings the total cost of the crime to $15,000,000 (the total after 15 years).

At first blush, this seems to be a pretty steep price to pay, especially if we’re only making $1900 for selling one fake coin. But there’s one tiny factor we haven’t yet included in our cost calculation: The odds of getting caught.

You see, the fakes have gotten so good that they’re almost never identified in the wild. And even when they are, the seller is almost never reported to the police, much less convicted of counterfeiting gold. Because the simple fact is that most people selling fake gold don’t even know it’s fake themselves. The gold has likely traded several hands by the time it is identified, and the person selling it at that point is actually a victim, not a criminal, because they’re the one who ends up losing their investment. 

So the reality is that the odds of getting caught are virtually zero. And when you try to square that with the infinite upside of selling fakes, you’ll start to grasp the scale of the problem we have on our hands…

Hacking Gold Bar QR Codes

GOLD GAuGE: Technology you can trust

What do Meta, Yahoo!, Uber, eBay, and Capital One have in common? If you said they were all Fortune 500 companies, I’m afraid you’re mistaken - Yahoo! is not a Fortune 500 company. The correct answer is that all of these companies that handle enormous swaths of sensitive data have been hacked. These attacks have impacted billions of users, with dollar value that is incalculably large.

So while much has been made of digital means for tracking gold authenticity, their success hinges on the security of their data. And if history has taught us anything, it’s that anyone can be hacked. In fact, compared to minting a convincing gold coin around a tungsten slug, breaching a network is the easy part. For the aspiring forger, things like QR codes, plastic sleeves, serial numbers are just bumps in the road, not dead ends. And the rising cost of gold only incentivizes hackers to toss their hats in the ring to try.

This raises other troubling questions. These apps authenticate bullion by comparing an identifying mark (again, QR code or serial number) with a database. But are they collecting auxiliary information while performing this service? Are they tracking and recording geolocation data for every scan they run? What about user data? Certainly, knowing the location and quantity of bullion - and its owner - could be of great interest to certain unethical parties.  And while there is no indication that companies are collecting this information per se, another axiom of the modern age is that those with access to data will inevitably harvest it. 

Perhaps there was something else those aforementioned companies have in common…

Designing the perfect fake gold coin

GOLD GAuGE: When you absolutely, positively must know

In our last post we discussed why tungsten is the ideal metal for faking gold. Now we’re going to discuss the design of said fakes. As the saying goes, “All that glitters is not gold.” Well, in our case, the opposite is true: All that does not glitter is not gold. And tungsten definitely does not glitter. So the first order of business will be to put the tungsten on the inside of whatever coin or bar you’re faking. Imagine a Twinkee: The spongy gold cake hides the creamy, tungsten-y filling.

Of course, the next step, determining the ratio of real surface gold to core tungsten gets a little more complicated. The main priority of any good fake is to be undetected. And just how much real gold you put on the surface of your bar/coin is going to dictate just how undetectable you are.

X-ray Fluorescence (XRF) is considered by many to be the “gold” standard for detecting fakes. Yet XRF is only capable of testing a depth on the order of 10-12 microns. A micron, for those of you unfamiliar, is one one millionth of a meter. So if you’re feeling greedy, maybe you’d be inclined to add only 15-20 microns of gold plating to your tungsten core. The best - and safest - fakes coming out of China boast an impressive 60 microns of surface gold. This will easily beat XRF, as well as the acid test, which assays much shallower depths. 

There are other ways to make your tungsten harder to find, too. Let’s say you’re worried about ultrasound testing. Yes, ultrasound has drawbacks - such as the need of a flat testing surface (the three-dimensional reliefs found on coins are particularly challenging) - but at least it’s capable of testing samples all the way through.

Or is it? Despite its penetration depth, Ultrasound can only scan a very narrow cross section of a sample at a time. Most users simply do not have the time to scan every square millimeter of surface area, so they usually take the easiest shortcut available - by scanning once in the middle. And if you’re using a donut-shaped slug of tungsten, it will slip by perfectly undetected. 

So the amount of tungsten you think you can get away with all comes down to your tolerance for risk. And with the price of gold running 100x the price of tungsten, either way you choose you stand to clear a very healthy profit.

Unless, of course, your client owns a GOLD GAuGE. Because of GOLD GAuGE’s unique detection technology, any impurities - even less than 1% - will be picked up, regardless of its shape or placement within the sample. There is simply no amount of plating that will fool it.

In other words, if you’re selling fake gold, you’re better off selling to Superman than someone who owns a GOLD GAuGE. Because even X-ray vision has its limits…

What is fake gold really made of?

The coin is fake, the GOLD GAuGE is real

The first time someone handles gold, they’re inevitably surprised. Not by how shiny or beautiful the color is, mind you, but by the weight. Gold is heavy. In fact, it’s one of the densest elements found in nature. And it’s this high density that makes it challenging - though not impossible - to pass off a gold-plated slug as the real thing. There’s a reason fool’s gold doesn’t fool anyone…

Material Density (g/cm^3)

Gold 19.3

Iridium 22.5

Osmium 22.6

Platinum 21.5

Plutonium 19.7

Rhenium 20.8

Tungsten 19.3

As we see here,  there are a few elements that could, in theory, convincingly replicate the weight of gold. However, most come with drawbacks that make them unsuitable candidates.

The price of iridium trades for $4,725/ounce - almost double that of gold at the moment. Plutonium is $113,400/ounce. Platinum, while not quite as costly as these two, is still impractically expensive. 

On the other hand, osmium and rhenium are two of the rarest elements in the crust. The market for these materials is so limited that pricing information is difficult to ascertain. The door is certainly open for their use in fraudulent gold, but given their scarcity, it seems unlikely.

That leaves just one element on the list: Tungsten. With a price of roughly $20/ounce, and a density that almost perfectly matches gold, it makes for a compelling candidate. Traditionally, tungsten was seen as an extraordinarily brittle metal that’s difficult to work with. But nowadays - with advancements in material science - these issues are a thing of the past.

So now we know what materials are used to make fake gold. Next time we’ll dive into how those fakes are designed…

The fastest way to make an easy buck

It’s 10PM. Do you know if your gold is real?

If you’re feeling unethical/criminal these days, I’ve got some good news. It’s never been easier to quickly make dishonest money. Pull up the proverbial log and stay a while, because I’ll be explaining the simple step-by-step process of how to commit a nearly-undetectable form of fraud. Of course, what I’m saying shouldn’t come as a surprise to anyone - this fraud has been widespread for the past few years. You may have even been an unwitting victim.

Our journey starts with a quick search on your favorite Chinese retailer. I recommend using the terms “gold eagle tungsten coin.” You’ll get a number of hits. Of course, the quality of these hits varies considerably. You may be tempted to go with one of the options that hovers in the $1-5 range. Unfortunately, these are about as convincing as those chocolate coins with the gold-colored foil. And what’s worse, they don’t even use real tungsten. Would you believe the dishonesty of some of these fake gold sellers?

No, you want to be focused more on the coins that are more around the $500 price point. These are the ones that feature real craftsmanship. Indeed, they will likely have accompanying photos of the coins on scales reading a precise 33.93 grams, or in the grip of calipers measuring an exact diameter of 32.70 millimeters. And yes, the seller will likely be talking up its impressive 60 micron-thick layer of gold plating - enough to fool the acid test or x-ray fluorescence. Not that the seller would ever dream of this being necessary. After all, these are collectible coins that are strictly for souvenir purposes only.

I know what you’re thinking. $500 is a lot of money for a fake coin, right? Well, when the price of gold hits $2400/ounce, suddenly shelling out $500 for a hyper-realistic coin that can fool density measurements, the acid test, and x-ray fluorescence doesn’t seem so crazy. Because if you slip one of these into a stack of 19 real gold coins, who’s going to notice? And suddenly you’ll start to wonder how many of these things are really out there.

Scared? You should be. But there’s some good news. Because as easy as it is to pull off this scam, it’s now easier than ever to stop it. GOLD GAuGE is a new piece of kit that should be essential to anyone handling gold these days. It’s fast, easy to use, and can spot even the most sophisticated forgeries from a mile away. Best of all is the price - $350 is the cheapest piece of mind you can get with all the trouble out there. Because trust me, these are scary times, and you don’t want to be caught empty-handed.