Gold is one of the most precious and coveted metals in the world. It is popular among people for its unique qualities and aesthetical utilization in jewelry. Gold is an excellent conductor of electricity and can be sculpted and shaped in a variety of ways. So fake gold vs real Gold?
The yellow metal has excellent anti-corrosion properties, and its sustainable value plays a key role in a country’s economic stability. All these qualities make gold the metal of choice for numerous companies, businesses, and industries.
Gold has been a valuable commodity throughout human history. The special metal is a hedge against inflation because it provides financial cover during difficult macroeconomic and geopolitical situations.
Undoubtedly, gold is a valuable metal with unique characteristics, but many forgers try to exploit the precious metal. Traditionally, alchemists tried to convert base metal into gold but failed to do so, but today, forgers have figured out the formula to make and sell fake gold.
If you want to purchase or invest in gold, you must know what you are buying. Otherwise, you will spend hundreds of thousands of dollars only to find that you have bought fake gold. In today’s article, we will talk about fake gold, the history of fake gold, the biggest scandals, and ways to identify counterfeit gold. Read on!
Fake Gold vs Real Gold – History
Gideon B. Smith invented an essential tool that would detect fake gold coins. Before that, people would perform some basic checks or steps to determine the purity of gold. That way, they would identify whether a coin is cheap base metal or real gold.
Spitting on the coin was one of the main methods used in the old days. For instance, a person would spit on the coin and rub it against a rough surface. The coin would contain fake gold if the base metal showed through after the gold-colored cover rubbed off.
Although these methods were basic and not advanced, yet they worked for people to identify counterfeit gold. However, the invention of counterfeit coin detectors allowed testers to fight against forgers and avoid fake gold.
Research shows that fake coin detectors benefited testers for many years, but it didn’t take long for forgers to counter such tools. Human history is full of counterfeit gold stories. Researchers say that counterfeit gold coins even existed 2,600 years ago when people would shave off a real coin’s edges and then use it to cover the base metals to create fake coins.
Counterfeiters used similar practices in the medieval era to make fake gold. However, modern fake gold is way advanced and difficult to detect using traditional methods. Anyway, in the 20th century, countries would use counterfeit coins in warfare to destabilize the enemy country’s economy.
One such story is about the U.S Mint that minted double edge coins in 1907. The organization was exposed after authorities discovered the counterfeiting of coins on a large scale.
Long story short, there have been many gold scandals throughout history, and next, we will discuss some of the biggest scandals. Continue reading!
Fake Gold vs Real Gold – Scandals
The history of gold has seen hundreds of scandals. Some of them are on a small scale, and others on a grand scale. Although we can’t highlight all scandals in this article considering the mammoth or a whopping number of fake gold stories, some of the most recent scandals have shackled the global gold market.
Fake-branded Gold Bars flowing into the global market
According to Reuters, it is hard to detect counterfeit gold, making it easy for warlords, criminals, and narcotic dealers to smuggle it across the world and make millions of dollars. A recent story break by Reuters highlights that criminals use logos of world-renowned refineries on fake gold bars and sell them in the global market.
Michael Mesaric, the CEO of Valcambi Refinery, said to Reuters that four major Gold Refiners in Switzerland had identified $50 million worth of gold bars stamped with Swiss refinery logos. Although these major refineries did not produce the gold bars, they were found in JPMorgan Chase & Co. vaults.
According to Perth Mint’s CEO, Richard Hayes, the gold is genuine, but its sources are not ethical. Hayes said criminals are using fake gold bars with stamped logos to launder them across the globe. Experts said that they don’t know the forgers behind the production of counterfeit gold bars.
However, the analysis suggested that the production facilities are somewhere in Asia, particularly China. Fake gold bars produced in China enter the market through Thai, Japanese, and Hong Kong-based trading houses and dealers.
The counterfeit gold from these markets then spread into the global supply chains. Although the number of fake gold bars has dropped for the last three years, refiners say that forgers are using highly sophisticated ways to introduce counterfeit gold in the market – said Richard Hayes.
The $4 Billion Loan Scandal in China
Many reputable news sources have revealed the $4 billion loan scandal in China. According to news sources, a company in Wuhan uses fake gold to get over $4 billion in loans. King-Old Jewelry is a Wuhan-based company that has produced more than 83 tons of gold, valuing over $4 billion to obtain loans from 14 Chinese Trust Banks.
According to Michael Wittmeyer, a gold professional with many years of experience at JMBullion.com, it is surprising that Chinese-based companies are recently involved in counterfeit gold production.
Wittmeyer said that Chinese gold refiners are selling replica products, and people pay a significant amount of money to buy such products. Although consumers think the gold is pure and the products are genuine, they are worthless.
According to Fox News, Wall Street firms have started investigations against the Wuhan-based company for trading counterfeit gold in the global market. The news article highlights that the borrowed money from 14 Chinese lenders and trust banks was used to buy the Tri-Rind Company that owns a large land in Shenzhen and Wuhan and invest in housing societies.
The Shanghai Gold Exchange canceled King-Old’s membership after a 23.77% plundering of shares within 24 hours. However, King-Old has denied all sorts of allegations, saying that they haven’t done anything wrong.
Different ways to Identify Fake Gold
There are different gold businesses operating in the market. Some of them are production companies, while others purchase or sell gold. Despite the nature of the business, it has always remained one of the world’s most profitable industries.
The interesting thing is that the gold industry continues to thrive globally despite the Covid-19 pandemic. The top three raw gold producers globally are China, Russia, and Australia, contributing 14%, 9%, and 8% to the global market, respectively.
Although these three countries produce gold worth $119 billion, experts argue that criminals are maligning the market with fake products. Forgers have finally learned to combine different inexpensive metals and coat them with materials to have the shape or appearance of pure gold.
Hundreds of thousands of people have become victims of such fraudulent activities, losing millions of dollars buying fake gold products. Criminals are using advanced, cutting-edge techniques to produce fake gold. However, today, we have some unique methods to identify fake gold easily. Let us talk about them in detail. Keep reading!
Basic Fake Gold Identification Techniques
For many people, it is hard to avoid fake gold products because forgers use advanced technology. However, there are some basic ways that you can use to identify counterfeit gold and protect yourself from forgeries.
· Contrast Color
Forgers achieve counterfeit gold by plating metals with a similar color. However, the color plating material has not the same color qualities as gold, which means it peels off over time, revealing the metal’s original color. You can compare the color of two products to differentiate between fake and real gold.
· Check the Stamps
As mentioned earlier in the article, major Swiss refiners have suspected gold bars worth millions of dollars circulating in the market with fake stamps. It is crucial to look for logos or stamps using a quality magnifying tool to differentiate real gold from fake ones. Although it is not easy to determine 100% purity of gold, checking the stamps can help you identify good pieces.
|Stamp||Meaning||Real or Fake|
|10K or 417||10 Karat or 41.7% Gold||Real|
|14K or 585||14 Karat or 58.5% Gold||Real|
|18K or 750||18 Karat or 75% Gold||Real|
|18KP||18 Karat Plum or higher||Real|
|14KP||14 Karat Plum or higher||Real|
|10KP||10 Karat or higher||Real|
|925||92.5% Sterling Silver||7.5% Gold may indicate fake gold|
|900 or 950||Platinum||Not Gold|
|1/20 10K||5% 10 Karat Gold||Not 100% Real Gold or Mixed Gold|
|HGP||Heavy Gold Plate||Fake|
|HGE||Heavy Gold Electroplate||Fake|
Analyzing stamps through high-quality magnification tools are not enough to differentiate real gold from the fake one. You have to perform several other tests, such as:
· Acid Test
It is a simple test that involves the reaction of gold with acid to determine its genuineness. The test requires you to make a slight scratch on gold’s surface and add a small drop of trioxo-nitrate acid (HNO3).
If your gold reacts with the acid, it means you have real gold. On the other hand, if you observe milky or green coloration, it indicates a gold-over sterling silver product or counterfeit gold.
· Sound Test
Research shows that each metal has its own specific sound frequency when it collides with other metals. For instance, you can easily identify gold’s purity or fakeness by the sound it makes while colliding with other metals.
A procedure known as “Ping Test” can be used to identify if the gold is real or fake. It requires you to listen to the sound the gold makes when struck. Remember, precious metals like gold will make a long and high-pitched ringing sound. In contrast, inexpensive metals or counterfeit gold will make a shorter and duller sound.
· Cross Section Check
Real gold has unique and long-lasting properties. For instance, the color of a genuine gold product won’t rust or fades even if you use it for years. Keep in mind that even an experienced and skilled forger plates the metal surface with color.
It means the counterfeiter will cut or break the metal at different positions to color it and represent the final product as the real gold. One way to differentiate the real gold from a fake one is to look for irregularities at the cross-section. If you observe different colors or layers of the material after breaking up the metal, you have a fake product.
· Magnet Test
Although magnets can attract precious materials like iron, they won’t move gold a bit. Keep in mind that magnets may repel other metals like silver, aluminum, and some types of stainless steel.
It means if you have a product made of silver with gold plating and the magnet repels it, it does not mean the product is real gold. That’s why we recommend performing other tests as well to know for sure.
Research shows that gold is a naturally non-magnetic material, and when you expose your product to a magnet, it must not attract it. If the magnet attracts the gold, you are dealing with a counterfeit product.
· Image Test
It is not easy to perform the image test if you lack knowledge of gold. The image test is carried out using advanced tools. The purpose is to analyze the images of gold to look for their properties. Professional gold refiners or dealers do such a test to rule out real gold from fake products.
Advanced Fake Gold Identification Methods
Because counterfeit gold products are increasing globally, researchers and scientists have developed or discovered some advanced techniques to detect fake gold. Next, we talk about them.
· X-RAY Fluorescence (XRF)
Many companies use the X-ray Fluorescence (XRF) test to determine the genuineness of gold. As the name indicates, the XRF technique uses a beam or X-ray wavelength or photons to penetrate or hit the gold product. X-ray photons colliding with the fake plated gold will release different amounts of energy, allowing you to identify the purity or fakeness of gold.
· Inductively Coupled Plasma Mass Spectrometry (ICP)
ICP is a highly sophisticated detection tool used to identify counterfeit gold. It is a form of spectrometry but different from Atomic Absorption Spectroscopy (AAS). The primary benefit of ICP is that you don’t need a large amount of gold for testing. The technique enables you to test even a small sample of the metal.
The method involves the ionization of the gold with an inductively coupled plasma. The tester uses the mass spectrometer to separate and measure the ions in the ionized gold. It is a useful method in analyzing the amount of gold present in the product, allowing you to tell whether the product is real or fake.
· Melting and Sampling Spectrum Detection
Although it is a vigorous test, it can help you detect the quality of gold. The procedure involves performing Differential Scanning Calorimetry, a thermo-analytical technique to identify gold. You can also use the method in combination with a reference gold sample method to analyze the sample.
It requires you to apply the same intensity temperature to the gold product and reference gold material. Next, you record the difference in temperature increase needed by the product and reference gold for heating. If there is a significant difference between the two materials’ heating properties, it means the tested product is fake.
· Smelting Identification
Smelting Identification is another effective method to identify fake gold readily. As the name indicates, the process involves melting or an alloy or ore or different elements to separate the metal of interest from base elements.
Generally, a machine called Superb-Melt Gold is used to carry out the smelting process. The procedure involves heating the ore or alloy to an extent to melt it. If you want to test the gold for genuineness, make you use a small piece of the product.
A melted piece of gold refers to its originality. On the other hand, a fake gold product will have other metals like zinc and copper after the procedure is completed.
· Metallographic Analysis
A growing body of research evidence validates the use of metallographic analysis. Studies show that this technique has been widely used for the detection of counterfeit gold and silver.
The method is based on the metallography principle and focuses on the use of microscopy. Generally, professionals use scanning electron microscopy or optical microscopy to analyze the properties of gold.
If you have good knowledge of gold properties, you can make an accurate comparison of two pieces to rule out real gold from counterfeited ones.
· Fire Assay
Fire Assay is a traditional method used for gold testing. Although fire assay is an old technique, it is still widely used to detect gold’s originality. The procedure involves evaluating the gold content in a sample piece.
You will use a furnace to melt the sample and measure its weight. Once the gold melts, you will pour it into a Cupel. Next, you will further heat the piece to melt away other metals, leaving the gold behind. The last step is to cool down the gold and measure its weight to determine the amount of genuine gold.
Fake gold products are thriving on the market, and forgers make billions of dollars, plundering people worldwide. There have been many fake gold scandals throughout human history, and the trend continues in the 21st century, where criminals are using advanced techniques to trick experts and common people.
We have already mentioned two of the recent gold scandals in this article. There are different basic and advanced techniques used to identify fake gold, such as acid test, cross-section check, stamp checks, and other advanced techniques.
Using the method mentioned above can help you detect fake gold and save yourself from losing big money. Good Luck!