How A Manhattan Jeweler Wound Up With Gold Bars Filled With Tungsten

Rob Wile
Business Insider
September 20, 2012

In March, certain corners of the Internet exploded when a one-kilo gold bar was allegedly found to have been “salted” with Tungsten, a metal with a similar weight but far less valuable.

In other words, a gold bar was filled with a much cheaper metal to defraud buyers. An ounce of gold is worth $1,766, while an ounce of Tungsten is worth about $360.

An alarmed, if skeptical, post from Felix Salmon first drew attention to it.

A more breathless take from ZeroHedge, referring to another alleged incident in 2010, sent conspiracy theorists into a frenzy:

So two documented incidents in two years: isolated? Or indication of the same phenomenon of precious metal debasement that marked the declining phase of the Roman empire.

Here was the photo that allegedly proved it:

Silver Doctors

Both the 2010 and March cases were subsequently debunked by the Perth Mint in Australia.

• A d v e r t i s e m e n t

But in no way has that ended speculation of a vast conspiracy that the world’s gold supplies are being debased by filling gold ingots with tungsten.

A gold dealer in Manhattan’s Diamond District on 47th Street discovered last week that an evidently certified gold bar was in fact more than 75 percent Tungsten.

Today we decided to follow up.

Ibrahim Fadl came to New York from Egypt in the mid-70s to earn a Masters in chemical engineering from Columbia University. He’s almost certainly the only guy on 47th Street with the periodic table of elements hanging in his office:

Eleven years ago, he opened his shop.

Recently, he said, a fellow merchant on 20th street drilled into a 10-oz. bar he’d been sold to check its quality — and learned it was salted with tungsten. He warned Fadl to do the same.

Here’s what Fadl found:

Rob Wile for Business Insider

Rob Wile for Business Insider

Ten ounce bars are thicker, making them harder to detect if counterfeited — the standard X-rays used by dealers don’t penetrate deep enough.

Plus, the bars had been sealed and numbered. So whoever did this must be running an extremely sophisticated operation, Fadl said.

“It’s a shame. This business is built on trust.”

The FBI and Secret Service are investigating the incident, but Fadl wonders whether it’s within their power to curb the practice, given the incentives involved.

“With the higher price, I am sure there’s a lot of this stuff,” he said. “People are bringing in anything shiny and trying to sell it.”

But there’s a difference between selling anything, and this level of forgery.

As Felix Salmon noted in his post from March:

…the economic incentives here are so enormous, for people looking to make a fortune in the fake-gold-bar industry, that I very much doubt no one has tried. And statistically speaking, if a bunch of people have tried, then some subset of those people will have succeeded.

Fadl says he bought the counterfeit from a Russian merchant who’d bought from him previously. He did not provide the merchant’s name and said the man had already returned to his home country.

We talked with several other merchants on 47th Street who said they heard about Fadl’s ordeal but remained unconcerned. Most said they only buy from merchants they know.

Of course, that was also true of Fadl.

At the same time, many told us there are a host of non-reputable dealers on the street who probably wouldn’t hesitate to sell salted metal.

Fadl said he contacted the media to get the word out to other reputable merchants that there is no precaution too great to ensure their business doesn’t get hosed.

“They put doubt in everybody’s head.”

This article was posted: Thursday, September 20, 2012 at 2:24 am

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