The Gold Standard

Back in September this year, some papers reported that China was moving to physically transfer it's gold holdings from the Bank of England to it's Hong Kong repositories (http://www.marketwatch.com/story/hong-kong-recalls-gold-reserves-from-london-2009-09-03). I guess in times of uncertainty we all want to be closer to our money.

Lately some non-mainstream media have reported that HK authorities discovered some 400 oz bars were not actually gold, but tungsten plated with gold. Surely the most trusted gold reserve in the world couldn't be passing counterfeits. Tungsten has almost identical weight and density characteristics as gold so its the perfect material for a sophisticated dupe. It sounds like a pretty far fetched conspiracy theory that could only happen in Hollywood movie scripts. If there is any truth to this perhaps it will be reported widely, or maybe not.

My point isn't that the world's gold reserves have been contaminated with salted bars, but that fraud can happen at any scale and don't be surprised there is some spec of truth to it. For example, who would have thought Bernie Maddoff could have orchestrated a fraud of epic proportions and duped so many investors for so long. Who could have though a few large investment firms could have decimated the world economy?

Someone mentioned to me (and quite proud) recently how India is buying up the worlds gold supply. I cringe at the thought that it could very well mean they have a lifetime supply of raw material for incandescent light bulbs.