The Fight Against Counterfeit Precious Metals
Gold has been on a meteoric rise for quite some time now – over 90% gains in 5 years – and thanks to these gains, it has gone from being an “old man’s investment” to the “hot ticket”. This surge in popularity, however, just as with any product that enjoys significant market demand or high value, has also attracted the attention of bad actors of all sorts and counterfeiters in particular. Fake bars and coins are nothing new, of course, but what is new are the methods being used and the quality of the fakes, which is now much higher than what we used to see in the past. Trying to keep pace with the counterfeiters is not an easy task for any company operating in the metals industry, but as we’ll explain in this article, at BFI Bullion, we have good reasons to remain confident in our ability to remain a step ahead.
“The Fight Against Counterfeit Precious Metals” was taken from BFI Bullion’s recent quarterly newsletter, the Digger, published on July 14, 2025. To read this latest quarterly Digger in its entirety, click here.
While the gold price rally has been regularly making mainstream headlines, especially over the last two years, the darker side of this bull market hasn’t really been getting the attention it merits. Of course, as our clients and regular readers will likely recall, we’ve been trying to do our best at BFI Bullion to highlight the risks posed by dealing with unscrupulous metals dealers, sharing the most common scams and traps that investors should watch out for and generally spreading awareness regarding the latest dangers within our industry. This time, we want to address the bigger problem that lies at the heart of so many fraudulent transactions, namely the fake bars and coins themselves.
The far-reaching impact of the counterfeit scourge
The counterfeit trade of today is far more evolved and sophisticated than the obvious knockoffs of yesteryear and the volumes of the fake metals entering the system are significantly higher as well. Already in 2019, it was reported that more than 1,000 counterfeit gold bars were detected in vaults around the world. Many of these bars were almost identical to their legitimate counterparts. They were marked with perfectly forged refinery stamps, passed assay and weight tests, and some were even found to be 99.98 percent pure, which explains how they were allowed to enter the global supply chain and remain undetected. Eventually, all bars from this specific batch were identified and removed, however, this incident raised a lot of questions about whether this finding represented only the tip of the iceberg.
Whatever concerns emerged back then will only be amplified today due to the extreme increase in gold’s popularity and the much wider access that investors have to it. They no longer need to reach out to a metals dealer, where in the least there would still be some quality control and authentication processes in place. They can just buy their gold bars at Costco together with their weekly groceries, or even worse, they can (and do!) buy their metals from eBay or Facebook groups. One can only imagine how many victims are actually out there, especially after having made their purchase from ill-advised online platforms. And unfortunately, imagination is all we have to go on, since even the best estimates cannot account for the people who don’t actually know they’re currently holding fake gold and are still relying on it for their retirement or to pass on to their children. They’ll only find out when it is too late, and even when they do, there are virtually no options to recover their losses.
What’s even more worrying is that the impact of counterfeiting doesn’t just stop with the individual victims that were harmed by it. On a much wider scale, it actually disrupts the entire industry. It increases supply fraudulently, which sabotages the market’s proper price finding mechanisms and throws off long-term forecasts, as analysts rely on corrupt data regarding existing supply levels. What’s more, anytime a scandal like the one in 2019 we mentioned before breaks, investor trust is of course tarnished. For example, in China similar stories seem to be piling up: In 2020, Nasdaq-listed company was caught using 83 tons of fake gold bars to secure loans from Chinese financial institutions, while even ordinary citizens are increasingly being scammed. As CNBC reported earlier this year: “Thousands of people in China have been duped into forking out money on “fake gold” — inferior or artificial gold — after trying to purchase so-called “999 gold” online, according to the government.”
Still, the most dangerous and devastating consequences of the counterfeit trade are not even about financial losses or its effects on the market. It is the human cost that is associated with it. Many of these criminal operations are linked to illegal mining, extremely exploitative and abusive practices, even modern slavery. There have also been numerous reports tying counterfeit gold to drug cartels and other criminal organizations. Similar to the horrors of the “blood diamond” trade, the impact of counterfeit metals goes far beyond monetary profits and losses.
Fakes becoming increasingly hard to detect
As with most products that promise great profits, counterfeiters have invested in technology and “R&D” of their own to improve their “offering” and to make sure their fakes go undetected for as long as possible. Of course, crude fake bars and coins are still out there and a lot of them are of such poor quality that any experienced industry professional would identify them as such in just a few minutes, in many cases without having to conduct any advanced tests at all. These bars certainly present a threat to individuals who make the mistake of trusting online fraudsters and who have no way of telling whether what they actually purchased is real or not. We shouldn’t forget that most people have never actually physically seen or held a bullion bar in their lives and their only point of reference is what they see in movies and on TV.
The real danger, however, to seasoned investors and to the metals industry itself comes from the sophisticated counterfeits that have emerged over the last years. As an analysis by the LBMA outlined: “Their methods have evolved well beyond crude imitations, with increasingly advanced manipulation of both material composition and physical characteristics. Some of the most common tactics are base metal plating and alloy manipulation, using other metals with dense cores to maintain the weight while minimizing the gold content. In addition to material-level deception, counterfeiters focus on exact duplication of product features. To create the same look and feel, they will reverse engineer products or use 3D printing to create dimensionally accurate molds. Items are then packaged to replicate branded assay cards with tamper-evident seals, and sometimes even security features. These fakes are then introduced into the market through online platforms, informal dealer networks, and sometimes through compromised points in the formal distribution chain.”
Detection and Countermeasures
Traditional techniques like visual inspection, or weight and gravity tests can easily be outwitted by today’s counterfeiters, while acid and magnetic tests come with their own problems, since the former can damage the bars and the latter only detects ferrous metals and limited alloys. More advanced methods, like X-Ray Fluorescence (XRF) can be duped by surface coating techniques used in the production of fake bars, while Inductively Coupled Plasma (ICP) Spectrometry is costly and time-consuming, making it impractical for random sample testing or on-site evaluations. Even if all of these tests were to be combined, it is still possible for a high-quality counterfeit bar to avoid detection.
This is where new approaches and new technologies come into play to help us develop new tools and processes that the counterfeiters cannot evade. Instead of merely relying on physical tests, clearly visible markings and physical paper trails alone, the industry is now adding covert security features and introducing technological innovations like blockchain to the mix. This is the idea behind aXedras, our sister company, that through our relationship with them, it will allow us to have the aforementioned degree of confidence in the integrity of our clients’ metals. aXedras has developed a secure, distributed ledger technology (DLT)-based platform that digitalizes B2B processes along the value chain of precious metals.
The company was founded in 2018 after extensive consultations with key players in the metals industry in Switzerland and abroad. It focused on leveraging technology to help address risks identified in the precious metals market, particularly duplicate or counterfeit bars and supply chain provenance. In 2024, aXedras was appointed by the LBMA as the official service provider for the Gold Bar Integrity (GBI) Database, and one dozen members of the World Gold Council, including AngloGold Ashanti, Eldorado Gold, and DRDGold, have already signed up. The GBI Database serves as a key governance tool, centralizing vault holdings and refiner data to improve market oversight and data integrity. This secure platform increases transparency in global gold supply chains by digitizing efforts around responsible sourcing. It also allows refiners and custodians to efficiently share information with the LBMA, supporting enhanced clarity, security, and scalability of market data.
One other important and practical step we’ve been able to take at BFI Bullion is to buy gold bars direct from Swiss refineries. In buying direct from a Swiss refinery, our clients receive freshly and newly produced gold bars. Delivery is then done by regularly set transport from the refinery to our storage provider near the Zurich airport. Buying straight from the Swiss refineries, also ensures proper liquidity in the future, without the risks posed by buying bars from lesser-known refineries, or purchasing from a secondary market.
Then there is the question of how easy it will be to sell metals in the future. This is oftentimes not considered or overlooked when buying. We’ve already heard from investors that purchased bars from metals dealers offering non-LBMA certified refiners. They had a hard time selling those bars and were stuck with having to sell the bars back to the actual metals dealer they purchased the bars from.
BFI Bullion strives to prioritize reliability and transparency in our offering for our clients, and as the year goes on, our clients will see the fruits of that labor.
>>Read the entire Digger here.
