By Bron Suchecki, on March 3rd, 2010
The gold bars filled with tungsten story is getting another run – see Zero Hedge and RunToGold.
Nick from ShareLynx Gold passed on to me today the following from the producers of the video (all personal info was removed by him before forwarding):
vielen Dank für Ihre Anfrage.
MANY THANKS FOR YOUR ENQUIRY
Das Video ist tatsächlich bei Argor in der Schweiz aufgenommen worden, allerdings in einem ganz anderen Zusammenhang.
THE VIDEO WAS EFFECTIVELY TAKEN AT ARGOR IN SWITZERLAND, ALTHOUGH IN A COMPLETELY DIFFERENT CONTEXT
Unten eine englischsprachige Erklärung hierzu, die Ihnen einige weitere Hintergrundinformationen gibt. Der Barren wurde übrigens schon vor über 10 Jahren bei Argor zum Einschmelzen abgegeben; sofort entdeckt und aus dem Verkehr gezogen. Gefälschte Barren kommen extrem selten vor, unsere Kollegen in den Schmelzen können sich an keinen Fall in den letzten Jahren erinnern, in denen ein solcher bei Heraeus zur Aufarbeitung eingeliefert wurde.
BELOW AN EXPLANATION IN ENGLISH TO THIS ISSUE, THAT WILL GIVE YOU SOME FURTHER BACKGROUND INFORMATION. THE BARS, BY THE WAY, WERE DELIVERED TO ARGOR ALREADY MORE THAN TEN YEARS AGO FOR SMELTING; WERE IMMEDIATELY DISCOVERED AND WITHDRAWN FROM CIRCULATION. COUNTERFEIT BARS ARE EXTREMELY RARE, OUR COLLEAGUES FROM THE FOUNDRY CANNOT RECALL A SINGLE INSTANCE IN THE LAST YEARS IN WHICH SUCH A BAR WAS DELIVERED TO HERAEUS FOR PROCESSING.
Statement:
The video shown on www.youtube.com is an extract from the weekly German television broadcast Galileo that discusses scientific topics. This particular broadcast covered the topic of gold including testing the purity of gold bars.
The presentation of the scene of (gold) production at the Argor Heraeus refinery – that was put on youtube.com in another context – when seen together with the text could therefore give an incorrect impression.
The false bar shown in the broadcast was a bar not produced by Heraeus; it was sent to the company for refining and detected already at the time of delivery. Compliance Management at Argor-Heraeus is very important and plays an important role at the company. Among others, it has very stringent rules for handling and dealing with precious metals.
Therefore, and combined also with strong and effective quality controls, Argor-Heraeus is able to assure the authenticity of gold bars produced by the company itself at all times.
Internet: www.heraeus-edelmetallhandel.de
Heraeus Metallhandelsgesellschaft mbH
Heraeusstr. 12-14, 63450 Hanau, Germany
So the video is about ten year old fake bars. Another example of commentators jumping the gun and hyping a story without any fact/background checking. To be fair, it really is only someone like Nick who has a worldwide well-connected subscriber base who can do that sort of checking.
I also find it interesting that the video Zero Hedge linked is the only upload of YouTube user wolframgold who only joined on 28 Feb 2010. This leads me to a conspiracy I am surprised none of the more rabid commentators have come up with yet, namely that the source of the tungsten rumours since October 2009 is either a refinery/mint trying to scare people away from the secondary market and ebay and into only buying new bars and coins OR producers of testing equipment!
Nick also passed on to me a link to BullionAnalysis.com, which has some nice pictures of fake Englehard silver bars that their equipment would have detected. This does undercut RunToGold’s conclusion from the tungsten scare that “if one is concerned about the quality of their gold then the other precious metals like silver and platinum are good alternatives”. Ouch.
I would also disagree with RunToGold’s statement that “detecting a high-quality fake tungsten gold bar would be extremely difficult. It would likely require significant and material alterations to the bar being tested and this would negatively affect the marketability if its hallmark veracity were vindicated.”
Ultrasonic testers will do the job without having to damage a bar. I quote some techo stuff from KK&S Instruments:
The 1090 Flaw Detector allows you to look into the Bar for voids/defects as well as UT velocity which is determined the products elastic modulus i.e Tungsten Velocity is 5183-5460m/sec and Gold is 3,240m/sec. For example if you calibrate for Au then the testing Tungsten bar of the same thickness, the UT thickness would read approximately half the actual because of the speeding-up of the sound through the Tungsten.
Problem is that it does require some technical knowledge to use the machine, so out of reach of retail investors and small coin dealers. It is probably prohibitively expensive as well.
I also think that it is fairly likely that the unintended consequence of commentators pushing the tungsten story is to drive mom & pop newbie gold investors into the ETFs. Making the decision to buying gold is a big change for the average investor and you can be sure they are seeking reassurance. Sow doubts in their mind about the “dangers” of physical gold and you will push them into ETFs, because mom & pop see them as regulated and thus safe. The very opposite of what many (if not all) commentators would want. I doubt they think about these consequences when they are looking for their next headline. 
By Eldon Mast, on March 3rd, 2010
The Institute for Supply Management released its February 2010 Manufacturing Report On Business Monday. The report shows that manufacturing jobs grew for the third month in a row. Even more upbeat was the fact that the report indicates that job growth in the sector is now accelerating.
Furthermore, overall economic activity in the manufacturing sector expanded in February for the seventh consecutive month and index correlations with the larger U.S. economy indicate growth now for the 10th consecutive month.
ISM’s Employment Index registered 56.1% in February. That is 2.8% points higher than what was reported for January. This third consecutive month of growth in manufacturing employment represents the highest reading for the index since January 2005.
Source: Institute for Supply Manufacturing
Ten of the 18 manufacturing industries that are tracked by the ISM reported growth in employment in February. They are: Textile Mills; Petroleum & Coal Products; Apparel, Leather & Allied Products; Paper Products; Machinery; Miscellaneous Manufacturing; Transportation Equipment; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Food, Beverage & Tobacco Products.
An early indicator of what jobs growth will look like in the near future is registered in the ISM’s Backlog of Orders Index. It registered 61 percent in February, accelerating 5% higher than in January. Of the respondents who report their backlog of orders to the ISM, a full third reported greater backlogs with only 1 in 10 reporting smaller backlogs. You may remember that as backlog orders grow, employers have in increased propensity to hire new workers.
Norbert J. Ore, chair of the ISM’s Business Survey Committee said, “The past relationship between the PMI and the overall economy indicates that the average PMI for January and February (57.5 percent) corresponds to a 5.2 percent increase in real gross domestic product (GDP).”
The report is further evidence of a U.S. economy that is on track for healthy net jobs creation by summer.
By Ajay Shah, on March 3rd, 2010
- Vikas Bajaj in the New York Times on privatisation in India.
- I had recently written a blog post on India’s foolishness on visa rules for people coming into conferences. Siddharth Varadarajan has a great opinion piece on this in the Hindu. In sensible countries, there is no such thing as a `visa for the purpose of attending a conference’. It’s just called a tourist visa.
- An editorial in the Wall Street Journal on India’s success on establishing a private sector with competition in mobile phones.
- Swaminathan S. Anklesaria Aiyar in the Economic Times on what the budget speech should say. Also see Ila Patnaik in Indian Express on the roadmap, and in Financial Express on expenditure. Writing in the Business Standard, Sanjaya Baru is also optimistic about what Pranab Mukherjee will be able to pull off.
- An extremely insightful conversation on charges of ETFs (in the comments to this post). This is the sort of thing one hopes for in blogs.
- Give financial sector a Financial Stability Board, in the Times of India.
- Bibek Debroy in Indian Express on India’s license-permit raj of exchange controls.
- I was at IFMR recently: did a talk on distribution of financial products, and looked at the `KGFS’ idea on increasing outreach of financial products.
- Sanjeev Sanyal in Business Standard on the outlook for Bombay.
- Andrew Jacobs in the New York Times on new developments in the Chinese end of India’s tiger extinction problem.
- John Gravois on remittances.
- We in India can look at the brainpower in the Chilean cabinet with wonder and envy.
- Catherine Rampall in the New York Times, reviewing Capitalism and the Jews by Jerry Z. Muller, which made me think about the different story of business-oriented ethnic groups of India.
- Robert Litan on financial innovation.
- Tarun Ramadorai in the Financial Express on hedge fund regulation.
- Alessandro Beber and Marco Pagano, on voxEU, analyse the global evidence on bans on short selling in the crisis. Hopefully we will learn the lesson for the next crisis.
- One of the great achievements of monetary policy reform in recent decades has been the establishment of executive Monetary Policy Committees (MPCs) which use formal voting mechanisms through which the policy rate is modified in order to achieve an inflation target, on a regular meeting cycle, with full transparency about how each person voted and why.
Writing on voxEU, Tim Besley and Andrew Scott emphasise the role of `fiscal councils’ where some (but not all) of these ideas are deployed into fiscal policy.
- I find it interesting to look at how the army of a great power works. See Elizabeth Rubin in Time magazine on Robert Gates (the US defence minister), and Chris Wilson in Slate on some remarkable soldiers. I suppose journalists like Elizabeth Rubin and Chris Wilson are also integral to being a great power.
- Interesting new things in the world of trading and exchanges, all from the Financial Times: Size of share orders cut in half on global markets and Small orders breed dark pools and higher costs by Jeremy Grant, Markets: Ghosts in the machine by Jeremy Grant and Michael Mackenzie, and lastly New US options exchange battles for market space by Hal Weitzman.
 
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By Richard Daughty, on March 2nd, 2010
I knew that something was amiss when I woke up and the house was quiet. Having the benefit of seeing a lot of movies where things were “too quiet”, I instantly knew that things being “too quiet!” meant that Indians were going to be attacking, or the Japanese attacking, or the Germans attacking, sometimes government goons rushing the place, or zombies, or the police. I dunno who, but you get the point.
Grabbing the bare necessities (a couple of pistols, a few Uzi submachine guns, a rocket-propelled grenade launcher and a lot of spare ammunition) I rolled off the bed onto the floor with the idea of scuttling into the closet to cringe in a defensive posture, bristling with weapons, making my enemies stop and think before killing me, giving me, I figure, a additional three more seconds to live!
Unfortunately, all those armaments were heavy, and it was pretty stupid of me to carry so much weight, now that I think about it, and I fell on the floor with a big clanking noise.
Still, nothing!
Then I saw why: it wasn’t attackers at all! The family had cleared out because my Mogambo Machine To Measure Magical Money (MMTMMM) was going nuts, banging and beeping, and clanging and cleeping, which is not even a real word, which only shows you how freaked out I still am when I instantly saw why: Federal Reserve Credit (the magical “money out of thin air” of story and song, which the gold standard would prevent), jumped a massive $31 billion last week – $31 billion in One Freaking Week (OFW)! – taking the total to a record $2.264 trillion.
The banks, for their part, can take this new credit that has appeared, as if by magic, on their books, and loan out Huge Freaking Multiples (HFM) of this $31 billion, according to the Fed’s preposterously-low required fractional-reserve ratio which is (and has been for almost two full decades) almost a zillion-to-one, which (multiplying a zillion times $31 billion) is slightly more than, as I understand it, a freaking gazillion.
Well, apparently, none of this reached the banks, as the Fed bought up, for itself in a disgusting orgy of monetization of government debt, in One Freaking Week (OFW), a massive $53.6 billion of “Securities bought outright”! The Fed created the money to buy government debt! Gaaaaagakkk!
That last word, properly pronounced with a guttural ending, was to indicate another in a series of Timeless Mogambo Truths (TMT), which, in this case, is don’t eat a burrito while you are reading Bad, Bad News (BBN) because you will gag and choke, mostly because it makes a big mess all over everything and the guy in the next cubicle starts whining, “Hey! Stop spitting on me!”, but also because transcripts of the people bugging your office will read it as “unintelligible, followed by gagging and choking”, which proves my point about eating burritos while reading BBN, although I am not sure if it works with, for example, tacos, so they are still OK as far as I am concerned.
In case you were wondering how much credit the Federal Reserve has made, so that it can use up some of it to buy, for itself in a loathsome fraud known as “monetizing the debt”, government debt, that particular horrific total comes to a record of $1.967 trillion, which is an astonishing $1.397 trillion higher than this time last year!!
As you would expect, the money supply is still rising, and the monetary base rose a whopping $56 billion in the last week, which is more than $560 for everybody in the Whole Freaking Country (WFC) that has a non-government job! In One Freaking Week (OFW)!
As Junior Mogambo Rangers (JMRs) know, perhaps intuitively or perhaps because I (as a proxy for the Austrian school of economics but who, if you call them up and ask them, say, “We never heard of this Mogambo person you speak of! Goodbye!”, but you can tell by their suspicious change of mood that they have) never seem to shut up about inflation being properly defined as an increase in the money supply and that inflation in consumer prices is a result of that, and here it is!
This increase in the money supply usually, firstly, has a stimulating effect or, in our case, prevention of the Big Freaking Bust (BFB) and economic devastation that we so richly deserve for a ridiculous, laughable half century of experimental socialist governmental deficit-spending and “putting every leveraged dollar to work!”, and the abysmal, total failure of the loathsome Federal Reserve to control the money supply so that the damned government couldn’t do crap like that without entering the money marketplace and bidding for the funds, like any other borrower, thus driving up interest rates, which made the economy slow down, which infuriated worker/voters, and the government would stop doing that fiscal incompetence immediately, or as soon as the next election rolled around, ignoring the possibly of a recall election in the interim, or even a general insurrection and revolution, perhaps ending with the people carrying me on their shoulders, a hero to rule the country as Emperor Mogambo (EM) who immediately installs a gold standard to protect the people’s money from inflation (which keeps from making the poor poorer because of the inevitable higher prices that the additional money causes), and, also as a treat for all my adult loyal subjects, dovetailing the arrival of 3-D TV with hearty encouragement to develop, at great speed, a brave, new world of 3-D pornography, leading America to a new golden age in many, many, many ways! I can hardly wait!
In the meantime, however, accumulate gold, silver and oil, especially using some kind of Dollar-Cost Averaging scheme, which has not been improved upon, either in its simplicity (you spend the same number of dollars per month, month after month) or its efficacy; it kicks butt over a long trend, as you are always buying more when they are cheap, and you buy less when they are more expensive.
Or, if you are like most people, you are an impatient, greedy little bastard who wants to make the biggest, most maximum profit possible, as soon as possible, by taking maximum risk that gold, silver and oil will never be cheaper than they are now, then you should rush out and buy as much gold, silver and oil as possible Right Freaking Now (RFN), exhausting every source of credit you can get your clutching, grasping little hands on, and then selling the kid’s stuff and buying more gold, silver and oil with that money, too!
Somewhere in between these extremes you will find yourself, my budding Junior Mogambo Ranger (JMR)! The effects of massive increases in the money supply (horrifying inflation) will lead you to True Mogambo Enlightenment (TME) about how economics really, really works, and in a blazing moment of incandescent, transcendent clarity, you will suddenly realize you have to buy gold, silver and oil, right away, because, “Whee! This investing stuff is easy!”
True Fiscal Insanity: Creating Money to Buy Government Debt originally appeared in the Daily Reckoning.
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By Trace Mayer, on March 2nd, 2010
When one goes to buy gold they want real gold, not some cheap substitute like a fake tungsten gold bar. There has been a lot of rumor, neither credible nor verifiable sources, about bars containing both gold, the Ancient Metal of Kings and tungsten, the ‘heavy stone’. 
Just like a $100 bill costs about $.04 to produce leading to a profit of $99.96 from such unethical currency production so likewise with the price of gold at $18,000 per pound and the price of tungsten around $25 per pound there is, for the unscrupulous, an opportunity for arbitrage.
GOLD PROPERTIES AND TUNGSTEN PROPERTIES
As Rayner Hesse observed on page 191 of Jewelry Making Through History, with the Stamp Act of 1854 the purity of gold jewelry was reduced and required to be hallmarked at 9k, 12k or 15k and so the search for gold alternatives began. Within a few decades the House of Cartier had gone international and Edward the VII named it the ‘Jeweler of Kings and King of Jewelers’. Presently, many watches are being made with tungsten carbide instead of gold because it is lightweight, takes a polish and is scratch resistant.
Gold has a density of 19.30 grams per cubic centimeter at room temprature and a liquid density at the melting point of 1,947.5°F of 17.31 grams per cubic centimeter. Tungsten has a density of 19.25 grams per cubic centimeter at room temprature and a liquid density of 17.6 grams per cubic centimeter at the melting point of 6,192°F.
But despite being used for jewelry and having similar densities gold, AU 79, and tungsten, W 74, are not the same element. But a 400 ounce bar with 1/16″ gold surrounding a tungsten slug would cost about $50,000 to make and would likely pass sound, feeling, chemical and weight tests along with an x-ray fluorescence scan. On the other hand, the higher profit margin $500 bar using small tungsten slugs with lead alloy would still pass a sound and feeling test but would be slightly underweight and it is likely that neither a chemical test nor a x-ray fluorescence test would be passed because the gold coating would not be thick enough.
HOW TO DETECT A FAKE TUNGSTEN GOLD BAR
Detecting a high-quality fake tungsten gold bar would be extremely difficult. It would likely require significant and material alterations to the bar being tested and this would negatively affect the marketability if its hallmark veracity were vindicated.
This is likely a reason why page Page 11 of the GLD prospectus states “Neither the Trustee nor the Custodian independently confirms the fineness of the gold allocated to the Trust in connection with the creation of a Basket [issuances].”
Nevertheless, the truly determined and experienced can ferret out whether there is tungsten contained in their gold bars. In fact, some already have found tungsten in bars which purport to be gold and this is how.
GOLD ALTERNATIVES
If one is concerned about the quality of their gold then the other precious metals like silver and platinum are good alternatives with the silver prices and platinum prices being strongly correlated with the gold price. One reason they are safer is because both silver and platinum have industrial applications and are widely consumed. The silver and platinum stock are rotated on a regular basis being melted down and fashioned into cell phones, catalytic converters, etc. and so the purity and integrity of the above ground stockpile is held to strict account because of physical demand market forces.
CONCLUSION
There is plenty of profit motive for fraudulent gold bars that are stuffed with tungsten. Imagine the pandemonium if the central banks not only had less than half the gold they claim but if of the gold they have the majority of it is filled with tungsten. Tungsten filled gold bars being ferreted out in Germany is disturbing. This is just another example of why to buy platinum or silver.
DISCLOSURES: Long physical gold, silver and platinum with no interest in the problematic SLV, Streettracks Gold ETF Trust Shares or the platinum ETFs.
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By Richard Daughty, on March 1st, 2010
The proverbial boogeyman, the phrase “end of the world as we know it”, is not particularly significant to me because it is, literally, always true, because any progress at all, anywhere, means that tomorrow will never be like today, and so “the end of the world as we know it” can be extended to mean “and it will be better and better!”
So, it is not very significant, especially when I get argumentative by being literal and obtuse about it, like now, which is my mood lately.
But when you use the phrase “end of the world as we know it” in the metaphorical sense, meaning “some terrifying catastrophe, to the maximum, in spades”, then it means something much uglier and catastrophic, which you already knew since I use the word “catastrophic” earlier in the sentence, teeming, as it does, with evil portents of ravenous beasts eating you and your family alive, your agonizing screams mixing with squawking vultures pecking hungrily at your liver, and the dead rising from their graves to pursue us endlessly so that they can eat our brains.
Anyway, that’s the way I have it figured, having distilled an entire lifetime of watching TV down into these kinds of little philosophical nuggets.
And since I am by nature dyspeptic and paranoid about the inevitable, horrible result of a growing government, a growing class of people dependent on government, and a Federal Reserve constantly creating more and more money and credit to accommodate them both, I think that I understand the use of the “end of the world as we know it” in its most disturbing sense, because ruinous inflation in prices – the Grim Reaper of economics! – is thus inevitable.
What to do? Well, the sad truth, that you learn as part of attaining True Mogambo Enlightenment (TME), is that nothing can be done, as proved by the One Freaking Fact (OFF) that if debts could be made to just disappear – poof! – by printing money, then everyone, and every country, would do it! And would always have done it!
But nobody, and no country, has ever succeeded in printing money to pay their debts without causing hyperinflation in consumer prices, as the people rose up in revolt, the whole country disintegrated, it was a big mess and everything was ruined.
This – this! – means that you should look deep, deep into my eyes so that you can see the Utter Mogambo Sincerity (UMS) in my eyes when I say that this means to everybody with one functioning brain cell that it Can’t Be Done (CBD) simple by virtue of the fact that nobody in history has ever done it, although many, many, many people have tried everything they could think of to do it, including putting merchants to death for daring to raise their prices high enough to cover their inflating costs!
This is one of the tried-and-true ways that governments (“desperate morons in charge!”) seem to think will actually work, despite the obvious stupidity of it, and that is why I was shocked when I saw that Obama is endorsing legislation to prevent health insurance companies from raising prices! Unbelievable! Gaaaaahhhhh!
As indicated by the sound effect in the “Gaaaaaahhhhh!”, one can only manage a scream of Loud Mogambo Outrage (LMO) at the sheer, staggering, socialist stupidity of declaring prices, a sound not unlike the Freaking Sound Of Doom (FSOD) already ringing in your ears or you wouldn’t be reading this, which is a clarion call, if ever there was one, to hie thyself, to make ready, the Mogambo Bunker Of I-Told-You-So (MBOITYS), because, brother, one of these days very soon you are going to be glad you did.
And if you bought gold, silver and oil with a gasping, grasping, gluttony of greed, then, likewise, one of these days very soon you are going to be glad you did!
Persistent Debts Despite the Printing Press originally appeared in the Daily Reckoning.
By Eldon Mast, on March 1st, 2010
Rebuilding of depleted inventories was behind an improvement in 4Q economic growth estimates above what was previously estimated. The estimate brought estimates up to 5.9% from earlier estimate of 5.7%. Last quarter’s growth was likely the strongest since 3Q 2003.
Inventory accumulation was estimated to have added 3.9% to economic growth last quarter. The accumulation of course was necessitated by dwindling stockpiles in several previous years. There was also an upward revision to growth in real imports to 15.3%.
Price inflation remains quite tame following little to no inflation during the prior two quarters. Diminished price gains for all of last year pulled the annual increase down to 1.2% which is its weakest increase since the early 1960s.
Almost 6% annualized growth and inflation at 1%? Does it get any better? Well, all signs point to Q1 growth accelerating.
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