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.
The only way to make passable fake gold bullion based on weight is to use tungsten clad with gold, and even that is trivial to detect with any proper equipment (which can be hard commercially starting around the cost of an ounce of gold) if the cladding isn't sufficiently thick.
Silver is faked way, way, way more wildly.
I'm a mod of /r/silverbugs and I've been compiling a list of fakes members of the sub have found over the years, there's some really fake gold in there too https://www.ryanmercer.com/ryansthoughts/2014/8/22/fake-silv...
Obviously the first thing to do would be to get the equipment you mention to detect tungsten. But what about the "if the cladding isn't sufficiently think" issue? How do you deal with that possibility? Would you have to drill into the gold, or something?
Nitric acid and 'touchstone' are an ok start, but if you have a larger specimen it could just be clad.
You can buy that kinda stuff at sites like https://www.goldfeverprospecting.com/goteki.html which have the black stone/touchstone, test needles, acid etc.
You can also do electronic testing, this used the conductivity of the specimen to give you a (generally accurate) idea of what purity of gold you are dealing with, this is usually used for jewellery. It's alright if you are familiar with gold jewellery, have a kt stamping and just want to do a quick non-destructive test.
You can do a specific gravity test via water displacement.
You can do XRF testing (if you've ever watched Cody's Lab he has one of these handhelds they vary in price and quality).
But if you really want to know for sure you have to do destructive testing like fire assay. If something is decently thick you'll need to drill it too, you'll even see this with silver once you start to get to the 100 troy ounce range sometimes.
Yeah, Cody's Lab is great.
Would buying gold coins as opposed to bars avoid this issue? I mean, I'd still want to test using the chemical and electric kits you mentioned. But is it safe to say that you can't hide tungsten inside a coin, and/or is there a foolproof way to detect that---without drilling it---since coins are thin? I really don't want to have to use a destructive test.
Since this is a startup site, if the answer to my question about coins is negative, I wonder if there could be a market for gold that is shaped in such a way that it can be easily verified? I did run across an outfit selling tiny gold "squares" that you could break off and give to people, but can't find it now. So maybe the idea of gold that you can 100% verify at home has already been done, though I don't think that was spiel.
Couldn't you, say, mix plutonium with a small amount of lead to dial in the weight you need?
It looks like osmium or platinum would be cost effective, at today's gold prices.
Platinum was historically used to dilute gold by alloying before it became valuable in its own right and chemical tests improved.
"Gone Platinum: Contraband and Chemistry in Eighteenth-Century Colombia"
Ultimately, the powers that be want to control the money supply and dollar flows. If gold is coming from an "unauthorized source" this disrupts the stability of the system.
I know this sounds a bit "conspiracy theory"-ish but I've come to view the global banking system in such a light: there are a few powerful players (namely the US) that need to know where money is flowing at all times.
By faking the stamp, gold from other sources (e.g. conflict zones) can be passed off as being from Swiss refineries, and thus used to launder money.
By counterfeiting the stamp, gold from these places can be passed off as being from one of the acceptable regions of the world. This is effectively smuggling items through a metaphorical blockade.
Say you've got a source of gold that no one else will touch (illegal mine, sanctioned country, slave labour, stolen gold, etc). It costs you way below market price, but no one will buy it from you.
You pour it into bars, stamp it with fake brands and sell it at market price to anyone you want.
Instant profit and your hands/money are clean.
Gold may be the dirtiest commodity out there. There are plenty of people that buys gold without worrying about its origins, to immediately melt it into something else. People that doesn't care where a meth head got this 24k gold necklace, will trade it for about 10% its value and melt it into jewelry again.
I'm sure the last worry of people buying gold bars is the source of them, specially if you can get them at a small discount. "Hey, look: I'm getting rich selling tobacco to children, weapons to both sides of a war, paying doctors to prescribe my drugs, flooding the oceans with crude oil... but that gold origin is what worries me at the end of the day."
A majority of our gold testing was designed for jewelry and used a rough glass square and an acid blend for the different major carats of gold we would see. It worked by rubbing off a small part of the gold onto the glass then adding some acid and watching it's reaction, if it wasn't gold or was lower purity it would dissolve and disappear quickly. It was rudimentary but it worked well enough, there were some subtleties with exactly how it should react that you learned over time.
What if Venezuela is smuggling its camouflaged crude oil inside Norwegian oil tankers?
How could any country be worse than Saudi Arabia?
Oil is very different depending on the origin. Some oils have more Sulphur, some oils have more tar-like parts. Some oil is very dark and some is almost transparent-yellow.
All these differences are fixed in distillation that separates the parts and removes the impurities, but not all distillation plants an handle all the types of oil.
Anyway, after distillation most people care only about the price.
But with oil that doesn't make sense because everyone is happy to buy from the Saudis, whose last scandal involved bone saws and acid vats.
It isn't helpful to the conversation to replace gold with oil.
Gold is extracted and usually refined locally, perhaps it is exported as an alloy with Silver or Platinum or other metal. After more refinement it can be converted to gold bars.
Oil has more variety, it's a mix of a hundred (thousand?) similar compound and it's exported (almost?) raw. So the composition and the level of the impurities vary a lot from the different sources. You can't ignore the source of the oil because your refinery may not be able to use it.
A better comparison is gasoline. The difference of gasoline with a bar of gold is that gasoline is still a mix of somewhat similar substances, but the variation is small. There are many variants, with different octane rating and different additives. It's not 100% true, but gasoline is somewhat fungible and you don't care too much about the origin if it has the quality you are looking for.
The Gold in this case is the exact same as the other gold it is reporting to be
To add to this, oil is a bit different in the simple fact that you need some level of skill to work in that industry and you're generally getting a livable wage (if not a very nice one) whereas gold mining in some countries is still done by what are effectively slaves (even by children).
This assumes the refinery isn't in on the fraud. If they are in on it they know what they are getting and there won't be a problem.
Of course I don't know the grades of oil from either place. (if I did know enough I'd probably not be allowed to talk about it...) It could be this substitution is fine for the refineries.
You can be sure refiners are testing before anything runs through the plant...
So I don't see how you could economically camouflage crude oil from relatively simple chemical tests.
Just because it isn't being burnt up doesn't mean it's providing no utility.
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.
Edit: Annual world consumption of oil is about 100 million, so we have about 15000 years of reserves left.  That seems to me to be a glut.
How long will current gold reserves last?
"World Oil Consumption measures the number of barrels that are consumed worldwide on an annual basis. It is an indicator released by BP. This metric tends to trend upwards except for a small dip in the 1980s and 2010. Interestingly enough, 2010 was also the time that Crude Oil prices plummeted because of supply and demand concerns."
15000 years. GLUT.
That /d means “per day.”
Your other link has the same figure. Or search “world oil consumption” and find a bazillion other sources all saying it’s per day.
This doesn’t even pass a basic smell test. That’s about 3 billion gallons. That’s about 10 gallons per American with the rest of the world getting nothing. Do you really think worldwide oil consumption is 10 gallons per American per year? The average American driver drives twelve thousand miles a year!
Let's say I manufacture a million widgets and can only sell one of them. HUGE excess.
Now let's say someone wants to buy a million widgets, but it takes me 3 weeks to build one. HUGE dearth.
> I hear rumors that there are exactly as many units of oil sold as units of oil bought
Gp compared the number of items sold with the number bought, not taking into consideration the number manufactured.
The bid/ask spread on the gold bars at the same dealer is close to 30%. The other markup is peanuts.
That's why it gold as the "investment" is mostly sold via day time infomercial on second rate TV networks ( the ones that currently broadcast in 480i ) and second rate cable channels as well as promoted by the likes of Glenn Beck right next to "have your own seed bank so you can plant your own garden for food when the economy collapses".
JPM made a lot of money serving those outfits but for it gold bar is just a blob of a certain weight and certain purity.
Of course, if you're doing that you're probably going to buying GLD or IAU, which closely track the spot price of gold. Or maybe you'll use an outfit like BullionVault, which has a spread comparable to large stocks, nowhere near 30%.
Which does not provide delivery of the gold bars.
When you want to sell it, it will become "about 10%" from the spot price down aka about 15% in reality.
Now do the algebra.
Criminal organizations, governments or oligarchs laundering 50 million dollars is nothing new or noteworthy.
I should find another aggregator and try to submit some quality technical stuff the next couple days. :) No point in complaining about something you can help fix.
Or by inserting all gold bars and their journey on a (perhaps blockchain-like) database verifiable by anyone?
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?
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?
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.
Not a great solution, but it would reduce replay attacks.
The jeweler could notify the originator that they destroyed a bar.
So as an individual, I have to trust the originator to keep the whereabouts of my kilobar private?... This is most probably a very bad idea.
For buyers wanting privacy, the could have a mechanism for the seller to tell them to discard the signature. It makes it useless for future transactions of course, but it would prevent replay up until point.
But it’s also not traditional arbitrage. The producers of these counterfeit bars would likely be delighted to have the real gold minting houses certify and stamp their gold for a reasonable price. But they can’t because of sanctions or possibly capital controls. This counterfeiting is about bypassing market controls to trade illicit gold.
You can embed a chip which itself is hard to copy, or which tries to protect an internal private key used to attest to the authenticity of the item. Then you have to be sure these chips are themselves secure from cloning, and possibly worry about them being recycled off discarded genuine items and reused.
If you want to make an attempt with some sort of passive shared secret or serial number (e.g. QR code), then you probably have to rely on that number being tied to where the item was being sold (Lot 174351 was sold on Date X and Retailer Y) and being able to lookup that number to track the history of the item. This is probably good enough for verifying "First Sale".
Once the item is being resold, it becomes harder to verify that a static value has not been cloned onto a counterfeit item, unless you are registering the item to each successive owner, and explicitly handing off the registration (like how it is done with cars and VINs).
I do not know of a solution that uses a static value that isn't protected by some sort of HSM, that also maintains the privacy of the person holding the item - e.g. does not require some sort of registry.
Dooglius mentions PUFs - this is type of HSM which uses micro-imperfections in a physical structure to essentially implement a hashing function, which can be used to implement a challenge-response protocol. The challenge with PUFs is that by relying on an uncontrollable aspect of the manufacturing process, these same performance variations may not be stable across environmental changes (temperature, humidity, voltage, time, etc.). The more error correction you add to ensure the function is repeatable, the less truly unclonable the function may become.
I have no idea if there would be a way to read such a number non-destructively.
I make the distinction with physical ownership over a gold-linked fund or future contract, sometimes refered to as paper gold.
Obviously most gold holders do not have metallurgical laboratories in their homes, so your assertion is half-wrong. Yes, there is no counterparty risk to the transaction: you hold the gold. But there is third-party trust that what you have is indeed gold.
Of course, I would be a bad Bitcoiner if I didn't mention that Bitcoin solves both of these problems. You can fully validate the quantity and validity of your bitcoin with your copy of the blockchain.
Unlike "blockchain people" though, I do not believe gold -- or any other physical object -- can be realistically tracked in a digital system. So I reject the "put gold on the blockchain" idea as a non-starter.
We cannot eliminate risk, but we can reduce and mitigate.
Another great victory for Blockchain.
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.
Edit: And of course put the info on block chain.
Geiger Edelmetalle , on their Geiger branded stuff, uses a a UV safety coating but it will rub off with enough handling (which is why many of us do not remove the shrink wrap they put on their bars), they also individually assign serial numbers that can be tracked online for gold and silver bars starting at 1 gram
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.
For banknotes, regular rollout of new formats (shape and shade) helps break counterfeit printers.  Maybe push for a new, somewhat different format?
 https://www.ecb.europa.eu/press/pr/date/2014/html/pr141219.e... https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr1905...
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.
> “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)).
- Each gold bar has a unique ID, on the bar
- A digital signature is made with the private key
- The digital signature is placed on the bar
- Everyone has to "know" which public key belongs to who
(If you put the public key on the bar, then the criminals will just generate their own keys or copy someone else's key.)
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.
Or human-traffickers. Or just about any nefarious agent. At some point, we need to look beyond the Hollywood cliches.
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
We detached this subthread from https://news.ycombinator.com/item?id=20819642.
I enjoy commenting here, and I have no intention on taking HN into an ideological flamewar, it is my honest take on that status of Money Laundering laws, and I would love to have an honest and frank conversation on why Money Laundering laws are bad for society,
Why is that type of conversation prohibited on this site? And if it is why was the thread allowed at all where Pro-Money Laundering laws (an objective authoritarian position) is allowed to be freely discussed without censor, but my counter position is not.
Generic ideological tangents are moderated on this site because they're off topic. They're off topic because they don't gratify intellectual curiosity (see https://news.ycombinator.com/newsguidelines.html). Why don't they do that? Because they're tedious and predictable, and usually end up being nasty.
Pablo Escobar was making billions, but had to bury them in ground to rot, because he couldn't move them into assets efficiently.
> 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?
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.
Systems of distributed power, with robust checks and balances are the solution to political corruption, not authoritarian money laundering laws
And I need to point out that it would be extremely difficult to decentralize authority so much that bribery is completely impractical without it being illegal. In such a society where there is no legal friction associated with bribery, what's to stop rich people from bribing police officers?
In white collar crime such bribery is extremely common.
Notably, an employer committing payroll fraud was recently brought to justice in Michigan by the new AG. It made headlines because such crimes are virtually never subject to law enforcement attention.
> It made headlines because such crimes are virtually never subject to law enforcement attention.
This is the sort of claim that needs citation. I'm not trying to argue with you, but the only support for this statement is your authority on the subject, and since you speak anonymously your authority is very limited. This also applies to your initial comment.
I didn't downvote you, and I actually agree with you that corruption often goes unpunished, but since you asked I thought I might point it out. In my experience, my comments on the internet that lack support don't get a good reception.
When I say Distributed power, with Checks and balances, that does not simply mean small regional Fifedom's with unlimited power. I suspect India's weak central government has limited power over the local regional governments making them very corruptible.
"Distributed power" is not synonymous with "small regional power"
One of the things the US gets right is neither that state nor the federal government is "more powerful" than the other, each have their place, and both can in different circumstances overrule each other, this has the benifiet of ensuring States do not go crazy with power and corruption, and that the feds do not go crazy with power and corruption
Over the last 200 years however we have consolidated ALOT of power into the Federal government, this is making things very very bad if you enjoy and prefer an individualist society with personal liberty
Money from illegal activities (drug trade, human trafficking, etc.) is used to buy gold mined illegally which entails a few questionable practices and effects (difficult and hazardous conditions, enviro concerns, cartel involvement, etc.). The gold is then refined and made to look like legit mined gold and thus “launders” the dirty money.
That's...definitely not how I'd stereotype HN posters in general.
He just said there's a lot of authoritarians on HN, which I believe to be factually correct: most libertarian-oriented comments on HN get downvoted into the ground.
It doesn't take even a majority to do that, just a large enough rabid mob.
Speaking of rabid mobs, most anti-capitalism-oriented comments get voted into the ground too. It's almost as if HN has a large group of people who are trying to discourage political fights.
If you believe HN is libertarian you would be in for an extreme shock if you encountered a real libertarian community
Nor is Silicon Valley anywhere CLOSE to libertarianism, Silicon Valley is extreme left Authoritarian
While HN does love markets (though nor really free markets) most of HN is Socially Authoritarian left