The world’s gold industry is facing a forgery crisis. Recently, Reuters reported that gold bars fraudulently bearing counterfeit logos of major refineries are illegally entering the global market. Forged gold facilitates the laundering of smuggled or illegal gold, and the bad news is that refinery and bank executives are having a hard time detecting them.
In the last three years alone, kilobars with an estimated market value exceeding $50 million bearing fake Swiss refinery logos have caught the attention of all four of Switzerland’s leading gold refiners. These bullions even found their way into the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the global gold market.
Such forgeries make an ideal fund-runner for narcotics dealers or warlords. These illegal uses are why industry regulators have serious concerns over the proliferation of fraudulent gold.
The Sophistication of The Forgery Fraud
Executives from leading Swiss refiners have found at least 1,000 fraudulent kilobars. Notably, this is only a small percentage of the total gold industry output of 2 million to 2.5 million bars each year. The fake logos of these bars are professionally forged and very hard to detect, leaving industry insiders to speculate on the amount of undetected fake bars in circulation.
Michael Mesaric, CEO of the Valcambi gold refinery, expressed such sentiments:
“The latest fake bars … are highly professionally done. {He said maybe a couple of thousand have been found, but the likelihood is that there are] “Way, way, way more still in circulation, and it still exists, and it still works.”
On the other hand, fake gold bars, which are blocks of cheaper metals plated with gold, are easier to detect. These gold-plated bars are a front for unsophisticated con artists that lure unsuspecting investors.
Meanwhile, forged logos are more subtle, irresistibly offering illegal gold with high purity a market presence. The latter scheme represents a way to flout global safeguards against conflict minerals and money laundering. International refiners, financiers, and regulators have a challenge in controlling this problem in an attempt to purge the international gold trade of blood gold and precious metals.
Why the Surge in Forgery?
Gold prices are significantly higher in 2019, with prices above $1,500 in the past week of trading. Global economic factors including trade wars and the possibility of a global recession are driving the demand for gold, inadvertently adding value to gold, a traditional safe-haven asset. With rising prices, there has been a proliferation of forgery cases from those looking to benefit from the lucrative commodity.
In the past decade or so, gold prices have been consistently high, even in times of global financial meltdowns. The boom in informal and illegal mining goes back to the mid-2000s. Illegal gold has to go through black market channels at discount prices without legitimate brand logos.
Therefore, nefarious elements forge the Swiss refiners’ logos, for example, to allow metal sourced and processed in war-torn parts of Africa, Venezuela, and North Korea to enter into the market. Normally, these metals, although pure, would not be legal or acceptable in the West. The proceeds of these forgeries mostly fund criminal networks or regimes with trade sanctions on them. These uses are why regulators are very concerned about the presence of the illegal gold bullions in mainstream trade.
At the moment, it is not easy to determine the source of forged gold bars. However, executives and bankers believe that most of these illegal bullions come from China, which is the world’s largest gold producer and importer. The bullion with forged logos then enters the market via dealers and trading houses in Hong Kong, Japan, and Thailand. Unfortunately, these illicit bars need acceptance from a single mainstream gold dealer. Afterward, they easily spread through global supply chains.
Bankers and industry leaders began to note the presence of the forged bars after the first half of 2017. American banking giant, J.P Morgan, which is one of the five banks which finalize trades in the $10 trillion-a-year London gold market, found at least two gold kilobars with the same identification number. The inconsistency was proof of forged gold in otherwise legitimate bullions, and the entire industry is now more aware of this problem.
Digitizing gold in NNN, the First Store is Open at Austria
The presence of forgeries and outright fake gold in the market is a challenge for an investor seeking to trade or make a purchase. In addition to that, physical gold trading with street dealers is inconvenient and unsafe. Gold is bulky but valuable thereby compounding storage problems.
Blockchain technology comes with an immutable decentralized ledger that is fast disrupting many industries globally. Accordingly, the Novem Gold, which uses the NEO blockchain, takes blockchain immutability and uses it to digitize and tokenize your gold holdings. Instead of trading in physical gold, you can store gold with Novem Gold and own tokens with the value corresponding to your gold holdings via the NNN tokens. Moreover, investors seeking to trade NNN tokens can buy NVM utility tokens at a discount in the ongoing ICO.
To make the process easy, the opening of the first Novem Gold store at Landstraße 1, 4020 Linz, Austria, allows owners of the yellow metal to physically deliver them for quality testing, sale, and eventual tokenization. Novem Gold stores these precious assets with a standard storage provider in Liechtenstein. This way, gold owners would not only have shifted associated costs to experts but would be confident that their assets are safe, accessible and they can sell any amount they wish instantaneously and without restrictions.
Novem Gold Make use of Experience and Technology
The founders of Novem Gold are seasoned precious metals and gemstone experts with crucial knowledge of international gold trade. Accordingly, the platform has the goal of dealing with the prevailing trust and transparency problems in the business of precious metals.
Novem Gold is in the market to provide people a better and safer means to transact gold. The platform’s NNN tokens have strict LBMA-certified gold backing. Users have the assurance of their ownership of NNN tokens even if Novem Gold goes bankrupt. Besides, traders can transact on the platform using the NVM utility token.
How does Novem Gold eliminate forgeries? The platform relies on industry experts to perform quality checks on all gold brought in. This process means that the experts can sieve out fake gold and detect forgeries in the testing process. An investor trading in NNN tokens with another investor on the blockchain is sure of fraud-free gold trading. Moreover, Novem Gold gives an investor access to the global market. Notably, investors can redeem their gold at any time should they wish to liquidate tokens.
Evidently, investors’ appetite for gold is at record levels. However, this also means that criminals are working overtime to infiltrate gold trade to cash-in. Tokenized gold brings unparalleled security and convenience to gold trading. An investor still gets to enjoy an asset independent of stock market fluctuations but in tokenized form.
NNN tokens still have the scarcity of gold because they will have direct gold backing for every token. Accordingly, you get a convenient store of wealth for diversified investments while enjoying the security and convenience of tokenized gold trading anywhere and in any amount.
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