A a well-known bank is rumored to have sold adulterated gold bars. (File photo/CFP)
Beijing-based blogger, "Jason" Feng Xiaoque, has claimed on his microblog that he has verified the impurity of gold bars sold by a well-known bank. Feng also suggested in a different post 40% of the gold bars traded in the Chinese market may be adulterated with iridium or tungsten.
Members of Gold and Jewelry Association of China's coastal Jiangsu province confirmed the authority previously found fake gold products in circulation, but none recently in the province. The 40% claim is almost certainly an exaggeration, reports the Yangtze Evening Post.
In the first of his microblog comments, Feng claimed "Someone with an XX Bank 1kg gold bar with authenticity certification and receipt intended to sell the gold to a gold and silver processing plant. The plant's boss brought it after verifying it was indeed sold by the XX Bank. However, a week after he sent the gold bar to Nanjing for purity testing, he received the analysis report revealing the gold was adulterated with iridium."
The two posts immediately attracted online attention. One web user questioned the veracity of Feng's claims, stating: "I took gold bars I purchased in China to Shanghai's testing facility; they nearly crushed the gold bars and the test results returned confirmed the bars are 100% pure. I suspect your friend's gold bar was switched by the testing plant's boss — I think the bank would not dare to do such a thing as adulteration."
Another message circulated on the internet claimed the Chinese gold market might have in circulation fake gold bars containing a tungsten core. The cost of manufacturing a 400 ounce fake gold bar is only US$50,000, far lower than the US$480,000 for a pure gold bar. If the gold price keeps rising markedly international crime organizations would certainly have an incentive to manufacture fake gold bars.
Even though it is the world's largest gold exchange-traded fund, SPDR Funds, points out in its prospectus that the SPDR Gold Fund can not guarantee the gold in storage is completely pure.