Because of the rise in value of precious metals in recent years, the counterfeiting of gold has become more common by unscrupulous individuals. In particular, tungsten has been used as a substitute for gold given their similar density.
Tungsten is sometimes used to defraud gold buyers and investors because it is merely .36 percent less dense than gold. It is sometimes used as a core with gold plating, and other times holes are drilled into gold bars and filled with tungsten. The similarity in density between tungsten and gold gives such counterfeit products the weight and size that allow them to pass a quick visual inspection. Tungsten is nowhere as near as valuable as gold, allowing counterfeiters to make significant profits by duping buyers.
The practice of filling gold with tungsten goes back to at least 1983, when the New York Times reported that Austrian police confiscated 10 counterfeit gold bars filled with tungsten from a ring of criminals at a Vienna hotel.
In 2012, it was widely reported in the press that a tungsten-filled kilo bar was discovered by the Australian bullion dealer ABC Bullion. Similarly, other gold-plated and tungsten-filled bars have been found on the market, though rarely. Also in that same year, a New York jeweler found that a 10 ounce gold bar he had purchased from a Russian merchant had a tungsten core.
The Perth Mint of Australia responded to the controversy by assuring gold buyers that these cases are extremely rare. They emphasize that inspectors at refineries can easily identify such counterfeit items. They also point out that they melt any non-Perth gold bullion as well as Perth products that appear aged or damaged, further decreasing the likelihood of passing on counterfeit products to consumers.
However, there is one Chinese vendor, ChinaTungsten Online, that is openly selling gold-plated tungsten, and instructs visitors to its website how to make such bars. They advertise this product as an excellent substitute for real gold among dealers when showcasing gold or at a trade fair as a safety countermeasure.
Because of concerns about counterfeits, reputable vendors test the gold bars and coins they receive to assure their customers that their products are as advertised. Pamp, GoldMoney, and other gold bullion dealers and refineries use ultrasound testing for their gold, which is considered a highly accurate way to authenticate gold.
Though the extent of tungsten counterfeiting may have been exaggerated by the media, investors should be cautious about where they purchase their gold and should stick with reputable dealers that test their products. Because counterfeit products are more likely to be found in heavier weights, investors may want to stick with gold bars and coins weighing one ounce or less to play it safe.