gold-investmentFor gold investors, the idea of buying gold that is not actually gold certainly leads to a significant amount of trepidation. As shown in the past in the gold investing community, rumors tend to circulate as gold prices rise. Today, it has been said that some of would be profiteers are trying to pass off painted tungsten bars as gold. Cheap substitutes have long been used to trick those investing in gold in order to get a slick profit. Whether the tungsten rumor turns out to be true or not remains to be seen. However, understanding the history of tungsten can help investors building a precious metals portfolio better understand this situation.

In order to understand the level of profit motive in producing something like fake gold bars made from tungsten, one should look to the discrepancy level in terms of cost of materials. Massive difference in price means that, for example, a four cent counterfeit $100 bill would mean a profit of $99.96 per bill. Obviously, this kind of profit is highly illegal, but for criminals the allure of that much profit per cheaply produced bill is strong. If we take a look at what gold investors pay for a pound of gold, currently around $18,000, we can then look to what it costs to produce about the same amount of tungsten. Today, the cost for a pound of tungsten is around $25. It does not take a mathematician to see that the profit margin here is enormous and thus, passing off fake tungsten bars to those investing in gold could be especially profitable.

Gold prices often fluctuate; when they are especially low, investors like to rush in and grab what they can at a low price. At this point, those looking to scam investors would most likely try to sell their fake bars to the average investor. Lower risks are involved in a person to person transfer than in trying to sell a fake gold bar to an experienced dealer.

The fake gold rumor, whether 100% accurate or not, does underscore the importance for gold investors in only doing business with those they trust. Researching those offering gold, especially in bar form due to the high amount of money being paid, is extremely important. Not all people play fair. Take a look at who you're interested in buying from and find out their record for ethical business practices. As an investor, this is part of your due diligence before you purchase any precious metal, commodity or stock in a company.

The methods for detecting whether a gold bar contains tungsten is in the process of being developed. Part of the problem is that the gold bar would need to be altered significantly in order to test for the presence of tungsten. This could affect the price one can ask for on the open market. These issues and more are being addressed by those investing in gold, however, experts do expect breakthroughs to be forthcoming in easy detection methods.