Fake Gold Creating Concern In Vietnam Gold Market

Recently, some goldsmith shops in Vietnam got a solicitation to buy bars coming from Hong Kong. Instead of being pure gold, they were about 60-75% gold with the remainder being a fine powder that examiners suspect is wolframite (tungsten.)

The information has immediate caused big worries among Vietnamese people, who have the habit of keeping gold as their assets in the context of high inflation, but they do not know for sure if the gold in their coffers are real gold or imitation gold. The problem is that the imitation gold cannot be discovered with modern machines....

The information about imitation gold has immediately made the domestic bullion gold market “fall into a crisis” as said by Nguyen Minh Chau, General Director of Bao Tin Minh Chau Gold, Silver and Gemstone Company.

“The bullion gold trade turnover of goldsmith companies has decreased by 50 percent. Especially, many companies have seen the turnover drop by 60-70 percent and they are at the risk of having shut down business,” Chau said.

He went on to say that the gold business has fallen into crisis because of the people’s psychology.

Oddly, the news story that reports on this disturbing development tries to put a happy face on the discovery and subsequent buying strike by saying it will help bring down inflation! The author, or a government censor, holds the unusual idea that a rise in gold causes inflation rather than revealing inflation. It's as if they believed that a rise in the mercury in a thermometer caused the weather to get hotter.

Regarding the tungsten: the crooks behind that scam are dangerously sophisticated. A normal con artist would plate gold over tungsten in order to maximize the theft, short-term. That kind of fraud can be detected with a touchstone.

Unfortunately, hollowing out only the centre and stuffing tungsten inside is much harder to detect. With that kind of sophisticated scam, the only recourses might be either sawing the bar open and/or melting it. Tungsten's melting point is much higher than gold's.

As a result of such scams, assaying costs to confirm good delivery on bars might well shoot up. Fortunately, there are other techniques available - looking for: soldered bars, bars that are mocked up to look like standard bars but aren't, bars with irregularities that indicate being sawed open and remelted. Sad to say, if the tungsten scam spreads it'll be harder to sell non-standard bars.


The remedy might be buying legal-tender bullion coins instead of high-weight bars. They're hard to counterfeit, and government mints may co-operate by making them even harder to fake. Bar smelters could help out too, by lining their bars with hard-to-duplicate riffings along the edges - something like the ribbing on coins. If such comes to pass, sad to say, the newer bars will go for a premium relative to older and less secure bars.