
Fake-branded bars slip dirty gold into world markets - aazaa
https://www.reuters.com/article/us-gold-swiss-fakes-exclusive/exclusive-fake-branded-bars-slip-dirty-gold-into-world-markets-idUSKCN1VI0DD
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fanzhang
According to the article, the gold bars are actually high-purity real gold.
Then the difference in price must be the small markup that branded stamped
gold bars get. This seems very different from the normal forgery I would
expect where the forger gets a large fraction of the bar's value.

If the bar is actually real gold, the nature of the damage is different. It's
less about undermining gold than it is about undermining the brand of the
stamp.

~~~
achow
If one replaces gold with crude oil then the gravity of this becomes clear.

What if Venezuela is smuggling its camouflaged crude oil inside Norwegian oil
tankers?

~~~
Fjolsvith
Big deal. There's a glut of oil and a dearth of gold.

~~~
mikeash
Seems like the other way around to me. Most oil gets used pretty quickly after
it’s produced. Most gold sits in vaults doing absolutely nothing.

~~~
dahfizz
Sitting in vaults is what gold does. It's being "used" as a store of value.

Just because it isn't being burnt up doesn't mean it's providing no utility.

~~~
mikeash
No particular quantity is needed to fulfill that function. If the gold supply
were half as big, then each bit would store twice as much value and nothing
would change other than the vaults being smaller. We have _way_ more gold than
is needed to do what it’s used for.

~~~
dahfizz
You're being reductive. If supply is the only thing that matters, then why has
the price of gold continued to rise even though we mine thousands of tons each
year?

~~~
mikeash
Saying that there’s a glut of oil and a dearth of gold based on their prices
is pretty reductive too.

It’s a simple thought experiment: what would the world look like if there were
twice as much X, or half as much X, than there actually is?

For X=oil, there would be profound changes. Half as much would require a
totally different looking economy. Twice as much would enable big changes.

For X=oil, nothing much changes. The industrial and decorative uses continue
as they do now. The “store of wealth” uses just have a ~2x difference in $/kg
compared to now.

Why does the price of gold continue to rise? Because enough people think
they’ll be able to sell it for a good price later.

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blobbers
The scale of this article seems to not be 'crisis' worthy.

Criminal organizations, governments or oligarchs laundering 50 _million_
dollars is nothing new or noteworthy.

~~~
wiglaf1979
Yep. If you do want to hear some 'crisis' worthy numbers in a similar vein as
this article I highly recommend giving "Moneyland" a chance. That's where the
money laundering gets bumped up into the professional level. I am glad I
listen to the audiobook but man is it disheartening to hear how bad it is
globally.

[https://www.npr.org/2019/05/01/719001286/moneyland-
reveals-h...](https://www.npr.org/2019/05/01/719001286/moneyland-reveals-how-
oligarchs-kleptocrats-and-crooks-stash-fortunes)

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qwerty456127
What the heck does the world need gold bars for if these are not allowed to be
traded freely without being legitimately stamped with the logos of major
refineries? If gold still has to be controlled this way, why not just issue
some kind of global money instead and stop drilling Earth for this? Also, what
distinguishes a warlord from an ordinary dictator which still is allowed to
use gold?

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phn
Would it be feasible to make signed gold bars, verifiable with some kind of
public key?

Or by inserting all gold bars and their journey on a (perhaps blockchain-like)
database verifiable by anyone?

~~~
moviuro
1\. Without giving it much thought, it's probably impossible to prevent
"replay" attacks. If I have listed tens of valid signatures, I can use them on
my new fake bars on the other side of the world, hoping my fake bar with good
signature never meets its genuine alter-ego.

2\. This sounds sane and feasible, but I'm not sure how anyone would deal with
a bar leaving and then re-entering the system. If I'm a jeweller, I might buy
a kilobar and melt it for rings, etc. It's inscribed as having left my
seller's stock, just as the bar I bought as a random individual. One bar is
meant to reenter the market, the other one not so much... how would you deal
with that?

~~~
knodi123
> One bar is meant to reenter the market, the other one not so much... how
> would you deal with that?

I'm not super knowledgeable about blockchain, but couldn't we arrange for
jewelers and such to gift it to a special individual called dev_null, whose
wallet keys have been intentionally lost?

~~~
phn
The jeweler could be able to mark his bar as destroyed in the chain, perhaps
registering the rings in a separate chain?

That way, if every entity that handles or processes gold did the same, you
could have a good idea of where each piece of gold comes from.

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ChuckMcM
Not too surprised by this. I have always been curious though about folks who
came across gold in one form (like a sunken treasure, or pillaging a museum in
a war zone) and wanted to turn it into cash, what prevents them from just
melting it down into bars and selling it that way. Saving themselves the step
of actually going to a refinery which is going to ask uncomfortable questions
seems like a logical step to me.

~~~
jimpudar
Nothing stops them, it's just that it will be harder to convert into cash than
if the gold was stamped.

For example, if I take a couple of Canadian Maple Leaf coins to any local "We
Buy Gold" shop, I'll get very close to spot price in cash with no questions
asked. The fact that they clearly came from the Canadian mint tells the dealer
that they can trust they are indeed made of 99.99 pure gold.

If I come to the same dealer with a bar of gold I melted and poured myself,
they may need to send it out to a lab for analysis to determine the purity,
actual weight, if I'm ripping them off, etc.

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m3kw9
The damage is more about criminals getting money laundered and hurting crime
fighters and also sanctions

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tomkinstinch
The coolest solution I've read about to note the producer is to emboss a
hologram in the metal, though perhaps with enough care this too could be faked
or copied:

[https://en.m.wikipedia.org/wiki/Kinebar](https://en.m.wikipedia.org/wiki/Kinebar)

~~~
lixtra
The coolest solution I heard was to look at a well defined spot of the gold
bar and register the impurities/bubbles/structure that naturally happen while
casting. This is very difficult to reproduce (because there is no legitimate
need to do so) and is already present.

Edit: And of course put the info on block chain.

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notyourday
This entire thing is silly.

Gold is a commodity. A gold bar is simply a unit of trade in a specific sub
market. There's not enough volume for gold bar trade to be liquid. So gold bar
market is a market of mattresses before the ship in a tube mattresses showed
up.

Dealers that trade gold _pretend_ that Gold Bar X is More Valuable Than A Gold
Bar Y which is why it is priced higher. The real reason is that dealer feels
the dealer can extract more money from a customer and the dealer happens to
have Gold Bar X.

Customers of the sucker variety think that by paying for Gold Bar Brand Y more
than equivalent Gold Bar Brand X they are getting "more value".

The thing is that the spread between bid/ask of a single gold bar is much
higher than the delta in price of a Gold Bar X and a Gold Bar Y.

This has been the case for at least last twenty years.

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moviuro
If the fake bars still don't meet the purity standard but are getting close
(in the article: 99.90, 99.97 or just short of 99.99), maybe up the standard?
Jump to 99.995 if technology allows.

For banknotes, regular rollout of new formats (shape and shade) helps break
counterfeit printers. [0] Maybe push for a new, somewhat different format?

[0]
[https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.e...](https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.en.html)
[https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr1905...](https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr190528~b1158f43b6.en.html)

~~~
mruts
They do meet the purity standards, that’s the point.

A better idea would to put a public key on each gold bar so that anyone can
verify the authenticity. The producers could then compile a list of all the
current locations of the gold and if someone tries to report a new
inconsistent location, flag it as a fake.

~~~
moviuro
I didn't understand that from the article. I understand that while
counterfeits are getting better, they are still not perfect imitations.

> “The level of counterfeit is becoming really good. Even for us it is hard to
> tell,” said a Swiss refinery executive who spoke on condition of anonymity.
> “They are, however, _slightly less pure_ because the people doing the
> counterfeits don’t have the equipment we have.”

For point 2, that's not going to work (copy-paste that key on another bar +
zero anonymity or privacy protection + no protection if fake bar is introduced
when real bar is out in the wild (in my backpack for example)).

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logfromblammo
_Pecunia non olet._

Gold has no smell.

If the bars are genuinely made of gold, and of the advertised weight and
purity, they are not counterfeit. The quantity of metal is the only thing that
matters.

If anything, the problem is the attempt to shoehorn provenance information
into what is clearly a money commodity, and one that loses its individual
identity every time it gets re-melted. Just let it go, man. You can't track
all the money on the planet all the time.

If this is a problem, the only solution is to demonetize gold and replace it
with a trackable, traceable substitute. And good luck with that. You'd be
replacing trust in chemistry and physics with trust in the money-tracers.

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chiefalchemist
> "The fakes are hard to detect, making them an ideal fund-runner for
> narcotics dealers or warlords."

Or human-traffickers. Or just about any nefarious agent. At some point, we
need to look beyond the Hollywood cliches.

~~~
tim333
Indeed sounds here that the main use is avoiding capital controls in China and
similar. I'm not sure that's even breaking the law once the things are outside
China.

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tuberelay
How do they know that these bars don't have 10% tungsten content deep inside?
Have they drilled them?

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syshum
Why is that an issue?

I am sure I will get downvoted to hell here because HN is full of
Authoritarians, but money "laundering" should not even need to be done, I
should not have to have a Special stamp to trade gold, or report money
transfers to the government, etc

It is a prime example of government creating a problem (a black market) for
things that should not be illegal in the first place (drugs and other items),
then having new laws that infringe further on peoples freedom to "solve" the
problem which itself creates even more problems

~~~
coolspot
Not downvoting you, but free untraceable and non-blockable money transactions
enable some dangerous criminal business models in a large scale. Uber-like
assassinations, heavy drug dealing, organ harvesting, cp, human trafficking,
etc.

Pablo Escobar was making billions, but had to bury them in ground to rot,
because he couldn't move them into assets efficiently.

~~~
mieseratte
> free untraceable and non-blockable money transactions enable some dangerous
> criminal business models

> Pablo Escobar was making billions, but had to bury them in ground to rot,
> because he couldn't move them into assets efficiently.

Doesn't that highlight the ultimate pointlessness of anti-laundering laws?
Despite Esboar's inability to store his assets in a bank, his activities
weren't actually stopped.

What benefit do the laws actively provide?

~~~
akiselev
_> What benefit do the laws actively provide?_

Just like a government can distort a market through intervention, so can
cartels distort a government through corruption. Unlike gang members, most
operatives in a government or political campaign need tons of clean money for
ad spending, transportation, and paying for venues, campaigners, etc. Most of
the individuals and businesses involved will not take dirty money for
liability reasons (at least in the US).

The purpose is to prevent some of the most violent organizations from getting
a foothold in politics that makes their underlying activities even harder to
stop.

