By Harry Miller, Coins Magazine January 20, 2010

There have been all sorts of estimates of the amount of gold in existence. One of the most credible estimates I have seen pegs the total at 165,000 metric tons, or enough to fill two football fields. Of course that is all somewhat educated conjecture. In these days of financial chaos with politicians, bankers and brokers that have less integrity than a pirate, what can you really rely on?

It has been reported by Pat Heller and others that the major depository in Hong Kong; HK LBMA (London Bullion Market Association) approved recently discovered tungsten bars that were gold coated or plated. These bars supposedly were 400-troy-ounce good delivery bars. Instead, they are purportedly only about 1 percent gold. They are said to have been shipped there from the United States.

Tungsten is nearly the same density as gold and virtually impossible to detect without careful scientific analysis. It is $20 a pound vs. $1,100 an ounce for gold. You can see the incentive.

All this makes one wonder about all the tons of physical gold bars backing those exchange traded funds, which by the way, are not required to audit their holdings. It also brings into question other venues of gold storage such as commodity warehouses in New York, London, Frankfurt, Paris, Zurich and even Fort Knox.

Ethiopia’s national bank has been told to inspect all the gold in its vaults. Gold bars they had shipped to South Africa a while back turned out to be gilded steel and the South Africans returned them. Apparently other even older bars in Ethiopian vaults are also suspect. Ethiopia is a major producer of newly mined gold. This puts into question the central bank’s holdings as well as reported annual production.

The Royal Canadian Mint has an accounting error that totals 17,514 troy ounces.

My point is does anybody know the extent of fraud that has plagued the bullion markets? If you are seeking gold as insurance or a store of wealth, how can you guard yourself against scoundrels?

Bullion coins are more difficult to fake. Older gold coins can be purchased in certified holders.

Know your dealer and avoid the thousands of newcomers to the trade. While many are reliable, far too many are from the ranks of the unscrupulous. Deal with someone who has been in business 10 years. Ask for references and verify them.



E-mailharrymkrause@opton line.com.



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