A fake gold bullion bar makes a fine gag gift, but think twice before making it part of your investment portfolio.
What would happen if the gold bars you bought from a reputable dealer were “salted” with tungsten?
Word has been spreading that some gold experts have cracked open the gold bars that they bought only to discover tungsten (a metal worth about one-fifth of the value of gold) inside. Since tungsten has a similar density to gold, it’s easy to confuse people, amateurs and experts alike. With bars of gold that weigh ten ounces or more, using regular x-rays to determine the chemical composition of the metal doesn’t work well since the x-rays don’t penetrate deep enough.
Some alarmists have referred to the recent findings as evidence of a possible market-shattering conspiracy. What if there are hundreds or thousands of counterfeit bars of gold sitting in the vaults of companies and governments? If you can’t trust that the gold you buy is genuine, would you really buy it? Regardless of the veracity of the possibility that gold supplies are tainted, if people simply think that they are, the price of the commodity could start tumbling.
An additional way that falsified gold bars can affect the price of gold is that it also increases the cost of ownership of gold, as there may be increased costs involved in higher level testing for purity.
Regardless of how you purchase your gold, beware of the possibility that the whole gold marketplace might be affected by some bad eggs… just a reminder that you shouldn’t put all your eggs in one basket, no matter how shiny it is.
About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning firm located in Jerusalem. He specializes in working with clients in New York, Florida, and Israel and is a licensed financial professional both in the U.S. and Israel. Securities are offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Doug’s newest book The Expatriates’ Guide to Handling Money and Taxes is available at www.expatguidetomoney.com. He hosts a weekly finance show, Goldstein on Gelt, on internet radio. Listen live or download podcasts. Toll-free from U.S. 1-888-327-6179, Jerusalem: (02) 624-2788. Follow on Twitter: @DougGoldstein or contact at firstname.lastname@example.org.
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