GOLD FRAUD EXCLUSIVE: EU and Asian sources allege the tungsten-switch has gone sovereign

Fool’s Gold? Deutsche Bank, China, and US embroiled in faking suspicions

On and off for over five years now, I’ve been reporting on the existence or otherwise of (1) the gold the US Federal Treasury claims to have stored securely at various points across America and (2) a fix/manipulation scam on the price of gold per se. When I first raised these points (along with thousands of other sites) in late 2006, we were all of us consigned by the commentariat of the day to those Outer Limits reserved for The Loonies.

Since that time, we have seen the mysteriously dramatic rise in the level of Chinese gold reserves, the admission by several central banks that they’ve been buying and selling the stuff below the radar, and the scandals involving manipulation of the Libor and Eubor rates which, on their own, make the claims of gold jiggery-pokery look considerably more credible.

During 2009, I reported a couple of times about major gold investors known to me personally who were having trouble persuading Swiss storage facilities to cough up the shiny metal, once those gold-bugs decided they’d like to shift it to somewhere less remote than Cuckoo-clock land. Over the last few weeks, we have seen various sovereign States (led by Germany) saying they’d variously like to audit and/or shift their gold reserves nearer to home. The US Federal Reserve’s delay in obliging its clients with sight and shipping of said stocks has gone from being mildly amusing via odd to alarming.

But now a new fraud has entered the frame.

For those who don’t already know this, tungsten has very nearly  the same density as refined gold. Gold sells today at around $1740 an ounce, and Tungsten at $10 a pound. With a bit of judicious disguise, putting tungsten inside a gold bar can even fool an X-ray machine under certain circumstances. A Slog source in Austria is now alleging that Deutsche Bank ‘fulfilled’ one gold repatriation in recent years with the help of Tungsten. He further claims that some of this has now turned up in Asia.

However, here’s the killer: since hearing this rumour (actually, it’s rather more than that, but I have a source to protect here) I’ve made a couple of calls and read some well-argued websites on the subject of tungsten issues. One consistent feedback concerns the Chinese opinion on these bars.

Their origin is thought by Beijing to be the United States of America.

Forbes rubbished the tungsten-in-gold story last March, but from a commonsense viewpoint I was struck by the article’s (a) apparent inability to see beyond drilling and infilling as the method, and (b) the author’s unwillingness to see the problem as only likely to occur in smallish shipments. Late last September, however, Zero Hedge ran a Tyler Durden piece confirming that several smaller retail gold bars sold in Manhattan had been found to have tungsten innards. The ZH take on this event was that it might be part of yet another Fed Reserve attempt to impugn gold’s validity, and thus keep investors locked into the stock market, bonds and property.

But the thing I’m hearing about in this instance – while it could have the same Fed/Central Bank motive – is on an entirely different scale. Here we are talking about an Establishment eurobank alleged to have been caught short on a fulfilment order, and using the tungsten scam to fill the gap.

This is an entirely different criminal intent: not the somewhat crude attempt to con a retail greenhorn, but rather an well-planned and sophisticated ‘salting’ of the gold bars by a major bank….designed to fool even an expert engaged in approving the purchase for a large sovereign client. Here, using perhaps as little as 25% tungsten would be enough to make up the embarrassing shortfall.

There is no reason at all for anyone to see this as far-fetched. The SME scams pulled by RBS, and Libor manipulations carried out across the piece of Establishment banking, have been solid evidence in recent times of desperation on the part of those suddenly faced with a brave new world where Berlin wants all its gold back….but the gold isn’t there any more.

The ramifications of this go far beyond a pro-am retail fraud. First off, ultimate discovery of the scam is a certainty: so you’d have to be pretty damned desperate to try it on. And second, I do find it intriguing that these reports have popped out of the woodwork just when the ECB is thought to be planning some form of gold-backing for any eventual eurobond issues – should the eurozone survive. Trust me, if Mario Draghi is capable of pulling the stunts he’s been at vis-a-vis Greek bailout ‘money’, Bank of Greece money-printing, and bondholder subordination, then like most Goldman Sachs graduates, he’s capable of anything.

As I write, gold is trading at the upper end of $1746-1751 per oz.

 

60 thoughts on “GOLD FRAUD EXCLUSIVE: EU and Asian sources allege the tungsten-switch has gone sovereign

  1. Tungsten, or Wolframite is reported to be the heaviest element occurring in any known, or reported as known, living organism. Such as certain bacteria, for instance.

  2. The back story to this (as I understand it), is that is was rumoured (allegedly, etc, etc) that the tungsten bars were originally manufactured in China during the era of a President who was known for his love of fine cigars. A staggering number of the bars were supposed to have been bought – and immediately disappeared into a certain banking system on the other side of the pond. So the Chinese would certainly be well-placed to know who got this “gold”.

    This is supposedly the reason why every central bank and his dog are wanting their gold back. Far from being a place of safety, other countries are, for very understandable reasons, wanting it back where they can touch it. The Germans have been told they can only have 50 tonnes a year back, and no they can’t look at it in the USA vaults, because there’s no standing room in the vault; this sounds pretty desperate to me. Bars sent to China and India have been drilled to check them, but the obvious thing to do would be to melt and re-cast the lot.

    John is right – this is a very big thing, ready to go pop. Anyone who casts doubt on this story is either terminally-stupid or has a very dodgy reason to discount the story.

    • Tungsten is very valuable during a period of ‘tooling up.’ See Wiki entry on ‘Tungsten’ for material support given to China in the 1930′s in return for element W. ‘High speed steel’ these days usually involves some % of W in the mix.

      • That’s the problem; no-one knows why the US can only send fifty tonnes a year back to the Fatherland. So, if I were being cynical, I might come to the conclusion that the US can only afford – or get – fifty tonnes a year from the markets because there isn’t actually any gold left in the vaults in the USA. If I’m wrong, why doesn’t the US return ALL the German gold; it’s the German’s property, after all? I think the Germans have agreed, and know why, and have agreed to keep quiet, because it’s either fifty tonnes a year or nothing.

      • You can compare it with a run on the banks by consumers at ATMs. If the yanks don’t have the gold, they can’t return it, same as the banks, when they don’t have the currency. Of course, not having the gold does escalate the problem a little, in comparison to not having the cash, I would say…

  3. The speed of sound in tungsten is almost twice that in gold – which makes any inserts easily detectable using ultrasound scanners. Same scanners that are widely used for prenatal checks. No need for expensive and dangerous Xrays which do not penetrate metal well anyhow.
    If you are willing to know what’s in your stock, that is.

    • Egg-zackly.
      The gold-coated tungsten bars shown earlier this year from a New York PM dealer wouldn’t have fooled a deaf mute. It looked like a kitkat wrapper over a monochrome turd. One ping with your fingernail would have rung alarm bells.
      I don’t doubt there is a lot of mischief going on in the bullion markets, but it has to be more sophisticated than this. I reckoned it was a false-flag to scare off ordinary folks.
      Keep buying gold folks, just make sure you go reputable.

  4. Bite it, ring it. Gold and tungsten neither bend the same nor sound the same (a “clunk” says its a duffer). if suspicious, follow Arunas advice and get thee to a maternity unit to “borrow” one of their scanners!

  5. IF only McMoron had a chemistry degree – he could have sold off 10 times as much of OUR GOLD without costing the UK reserves a single penny in real value…….another sign of incompetence from the worlds saviour :)

  6. ALTERNATIVELY…. what better way to take the shine off the precious metal and slow any “flight to safety” or “store of wealth” than to under-mine (sic) that by suggesting fraud, impurities and really, it’s no more valuable than this stock certificate/bond/IOU/FIAT (delete as appropriate), honest

    Don’t get me wrong, I read the ZeroHedge piece at the time and would be called by many a bug, and I am also sure JW is relaying what he’s been told but… I find myself wondering, what’s the scam here?… adding tugsten and salting OR the impact of saying that’s going on at a level beyond the unscrupulous middle men in HK or Aussie? A bit of small-time crookery won’t dissuade a gold-bug. Institutional crookery may…

    Just my .028g worth

  7. There was this interesting Zerohedge story from 9th Nov which suggested that the BOE in 1968 was questioning the quality of Gold Bars sent from the Fed to go via London to the Bunderbank……It may be worth a read in the light of these latest revelations.

    Exclusive: Bank Of England To The Fed: “No Indication Should, Of Course, Be Given To The Bundesbank…”

    The full text of the 1968 BoE to Fed Memo is particularly enlightening half way down the piece, as it implies that the Fed may have been sending ‘bad deliveries’ to other collectors of the shiny stuff for some considerable time, and were trying very hard, even then, to cover their tracks!

      • When silver takes off, the 20% vat will not have mattered, silver is still cheap (at the moment) even with the vat.
        Just remember that 1oz silver Britannias are (at the moment) not subject to capital gains tax as they are legal tender in this country.

  8. As Old Soldier alluded to, the simplest way for any gold owner to check the validity of their gold is to melt it down and re-cast. Tungsten has a melting point of over 3000c, the highest melting point of any pure metal, gold has the MP of just over 1000c. They’d have to use pure tungsten I think, they couldn’t use a compound because that would screw the density calculations up. Therefore put it in the pot and if there are one solid and one liquid bit after the gold melts someone’s scammed you.

    One thing I am sure of is this, the fed will have checked already and someone has the potentially most explosive secret, next to a nuke in the back pocket, already in their possession.

  9. Pingback: John Ward – Gold Fraud Exclusive : EU And Asian Sources Allege The Tungsten-Switch Has Gone Sovereign – 26 November 2012 | Lucas 2012 Infos

  10. “Over the last few weeks, we have seen various sovereign States (led by Germany) saying they’d variously like to audit and/or shift their gold reserves nearer to home.”

    Something has been niggling me for a while, so I went back to page 12, and a couple of others, of the publication “Die Jahrhundertlüge” (= The Lie of the Century). The fundamental bits from a notification that copy Nr. 4 of the original secret treaty has gone missing:

    “Secret treaty dated 21.05.1949

    The secret treaty reveals inter alia

    (…)

    - and seizure of the gold reserves of the Federal Republic by the Allies.”

    Now, for those that don’t know: ‘The FRG existed from 23.05.1949 to 17.07.1990 solely on the basis of the constituent “Basic Law”.’ Point to note – the above treaty was signed 2 days before the FRG existed!

    Now, two points in answer to the question, “Which country do you belong to?”,

    ‘The “Federal Republic of Germany” was legally dissolved by the Allies on 17.07.1990 during the Paris conference with the deletion of Article 23 of the “Basic Law”‘

    ‘Since the “Federal Republic of Germany” no longer exists, since 18.07.1990, you cannot belong to this alleged state!’

    So, which state am I currently resident in, and what is the nationality of my wife, JW’s wife and Nigel Farage’s wife?

    Wolfie let the cat out of the bag some time ago, “Germany has, since 08 May 1945, never been a sovereign state.”

    Okay, so what exactly happened at the 2+4 meetings 20 odd years ago? In particular, what was agreed about the German gold reserves? Are the German gold reserves still subject to seizure, or can Wolfie treat them as his own?

    So many questions, so few answers.

      • Why do you think the US runs German news sources as you have alleged? Why do you think they are trying to sink the EU while keeping the euro low for their import sales and keeping the world investing in their bonds. What were the two country’s whose banks were most involved in the 2007 crash? USA and Germany.

  11. It’s Schrödinger’s Gold. Seems reasonable to assume that as part and parcel of the multi-quadrillions of fractionally enhanced dross that hangs over their heads, the Fed and other central banks would really prefer everyone to embrace the notion of quantum uncertainty when it comes to the idea of maintaining precious metal reserves. The gold both exists and doesn’t exist at the same time as long as nobody observes it. When you send inspectors round for a shufti …shazaam! …it’s gone. Or is it? Either way it’s “everyone’s fault but ours, you should have stuck with letting us do things our way and kept your noses out.”

  12. So Mark Carney agrees to take over as the new governor of the Bank of England and the UK becomes another subsidiary of Goldman Sachs.

    Nice. You couldn’t make it up.

    I need to lie down in a darkened room and then go out and buy some more physical Au.

  13. Maybe OT, but it is about gold as a currency and JW’s favourite Turkish Delight:

    “Turkey must purchase gas in Iran for gold

    It is just a few days since the Turkish Minister Bagis once again bragged and said that Turkey would save the EU financially, and so the EU couldn’t do anything differently than take in the Turks. Just how weakly Turkey is saddled economically is shown in a report in the WSJ (in German, in the online German edition). According to it, Ankara is breaking the boycott against Iran and is ultimately paying for its gas imports in gold. The Iranians simply don’t want the raggy Turkish lira. Interesting is also something else!

    Turkey gets 18 percent of its natural gas and 51 percent of its oil from Iran. We remember how Erdogan showed off in that he said he would or would not supply us and Europe with energy. He has obviously got nothing himself. His threat of force is only the fact that he would like to route all pipelines to Europe through his territory, and then he’ll fit a tap on each one of them to be able to close the pipeline down.

    (…)

  14. Those people with lots of this yellow shiny metal will all of a sudden be investing in ultra sound equipment so it seems. Mr Putin will along with other gold buyers be looking at their stash with concern.

    If it is true about the $50bn of gold per year limit placed on German repatriation of reserves from the Fed then I would be smelting every damned bar of it. Frau Merkel should be wanting to know exactly why it takes so long to ship these reserves.

    Chances are that those who’ve done these tests and found they’ve been had will say sod it and pass the dude bars on to the next sucker in line Caveat Emptor applies. Are you really going to melt it all down and loss serious money or are you going to exploit a sellers markets? You’d be as dishonest as they original crook as you’d know about the Tungsten but hey you’d have the money in your pocket.

    The trouble is that someone that does not play by the normal rules screams blue murder about being conned out of the gold they thought that they’d bought. The find the lady scam only works when people think it is an honest game. If a wider circle of people begin to think the market is rigged then the whole game is up.

    Hugo Chávez has asked for Venezuela gold reserves back from the Bank of England and if any Tungsten filled bars have found their way back to South America then Hugo will hardly turn the other cheek and say accidents will happen.

    • True to both your points; but every case I have seen in the media of gold repatriation has ended with phrase “…and a proportion of the bars are going to be drilled/melted to check the purity”.

      What is the world coming to? The whole idea of the sealed vaults was that the purity and weight of a “London Good Delivery” bar was that it could be trusted…

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  18. Gold’s Value to Double Overnight AFTER January ‘13
    Before Basel III, banks had to hold around 6% of the value of outstanding loans as collateral for loans. Most of that 6% was comprised of what’s called Tier 1 assets: cash and company stock (Treasury bonds count as cash).
    After Basel III, banks are required to hold approximately 12% of Tier 1 capital.
    But the big news is gold will now be considered a Tier 1 asset.
    Prior to Basel III, a bank could only count 50% of gold’s market value as collateral. In other words, gold’s value will double as a banking asset. And the price of gold on the spot market will almost certainly launch higher as well.
    This isn’t being reported by the major financial media. It’s a more significant move regulation than anything in Dodd-Frank.
    Basel III will fundamentally change the way gold is valued by the financial markets.
    Personally, I view the fact that no one is talking about this story as a gift from the market gods.
    Because the new rules for gold isn’t conjecture; this isn’t a guess as to what the Basel Committee on Banking Supervision might do…
    I’m not reading the tea leaves for evidence of some global conspiracy.
    Basel III’s new rules for gold are coming.
    The European Union will adopt Basel III rules in 2013. So will Russia and Japan. China, India, and even Pakistan are on board… Australia, New Zealand, Brazil, and South Africa, too.

    • Basel 3 not quite so clearcut, refer
      http://sprottasset.com/markets-at-a-glance/gold-solution-to-the-banking-crisis/

      Extract:
      One of the more relevant aspects of Basel III for our portfolios is its treatment of gold as an asset class. Documents posted by the Bank of International Settlements (which houses the Basel Committee) and the United States FDIC have both referenced gold as a “zero percent risk-weighted item” in their proposed frameworks, which has launched spirited rumours within the gold community that Basel III may define gold as a “Tier 1” asset, along with cash and AAA-government securities.8,9 We have discovered in delving further that gold’s treatment in Basel III is far more complicated than the rumours suggest, and is still, for all intents and purposes, very much undecided. Without burdening our readers with the turgid details, it turns out that the reference to gold as a “zero-percent risk-weighted item” only relates to its treatment in specific Basel III regulation related to the liquidity of bank assets vs. its liabilities. (For a more comprehensive explanation of Basel III’s treatment of gold, please see the Appendix). But what the Basel III proposals do confirm is the regulators’ desire for banks to improve their liquidity position by holding a larger amount of “high-quality”, liquid assets in order to improve their overall solvency in the event of another crisis.

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