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Fake-branded bars slip dirty gold onto world markets

Credit: Reuters Studio
Published on August 28, 2019 - Duration: 01:46s

Fake-branded bars slip dirty gold onto world markets

A forgery crisis is quietly roiling the world's gold industry, with gold bars fraudulently stamped with the logos of major refineries being inserted into the global market to launder smuggled or illegal gold.

Julian Satterthwaite reports.

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Fake-branded bars slip dirty gold onto world markets

There's a hidden scandal in the gold trade.

Fake bullion.

Not fake metal that is.

But bars falsely identified as coming from reputable refiners.

When in fact they come from places unknown, and are used to funnel funds to drug dealers and warlords.

Over the past three years, mislabeled bars worth at least 50 million dollars have been found just in the vaults of JP Morgan.

That's according to executives at gold refineries, banks and other industry players.

They've told Reuters that at least one thousand such bars have been found.

But the fakes are hard to spot, meaning there are probably many more out there.

No one knows who's making the forgeries, though industry sources think most originate in China.

Consultants say up to 600 tonnes of gold is snuck out of the country every year.

The allegation is disputed by the Shanghai Gold Exchange, which regulates China's bullion market.

It says it isn't aware of any such smuggling.

JP Morgan wouldn't comment on the Reuters figures.

It would only say that it always alerts authorities when a mislabeled bar is found, and its customers haven't lost any money.

But few dispute that the problem exists.

Now refiners are fighting back with technology.

Swiss producer Metalor puts tamper-proof ink on its output.

Others keep a microscopically detailed scan of every bar as a record.

But every kilo of bullion is worth around 50 thousand dollars at current prices.

Not many fakes have to sneak through, to make big money for smugglers.

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