PRECIOUS
METALS
MARKET

COUNTERFEIT AND FRAUD PROTECTION:
PRECIOUS METAL PRODUCTS

Precious metals are naturally occurring rare chemical elements. Today the following metals are considered as precious metals: rhodium, platinum, gold, palladium, iridium osmium, rhenium, ruthenium, germanium, beryllium, silver, indium, gallium, tellurium, bismuth, and mercury. It is interesting to note that for quite some time aluminum was also considered as precious metal, but today that is no longer the case.

Precious metals have a high economic value and are often used as investment vehicles in trading, preservation of value, coinage, art and jewelry, and of course, the electronic and medical industries.

Looking at the supply of precious metals, for the 4 main metals gold, silver, platinum, and palladium, 70 to 80% of the yearly supply comes from new mining, the other 20 to 30% are retrieved through recycling (CME).

For Gold, the total global yearly supply is approximately 3’700 metric tons, worth about $150 billion. For comparison, silver exceeds 30’000 metric tons per year.

So, what are the potential problems that may occur when working with precious metals?

  • Responsible sourcing
  • Metal Purity
  • Weighting
  • Tampering
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challenges with precious metals

RESPONSIBLE SOURCING

Responsible Sourcing, according to the International Chamber of Commerce is “a voluntary commitment by companies to take into account social and environmental considerations when managing their relationships with suppliers”. It goes, of course, far beyond this and today many refineries adopt this approach which allows tracking and tracing of precious metal provenance, handling, and transformation. Very often, systems are put in place using technical solutions for example blockchain and third-party based auditing and certification.

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METAL PURITY

Playing with the purity of precious metals in order to artificially increase weight has been done throughout history and is one of the biggest problems to tackle. The fineness or purity of precious metals, that is the weight of fine metal therein, in proportion to the total weight, can be modified by adding other metals or impurities. Detecting or verifying precious metal purity is a complicated process and expensive. Possible solutions are based on magnetic tests, acid tests on stone, ultrasonic tests, testing electrical properties, X-ray fluorescence (XRF) and spectrography. For end-users the cost of these tests is often out of reach. In the case of minted products or bullion products, end-users often use the brand reputation of the refinery as a mean to authenticate the quality, value, and genuineness of the product. This has however other problems, as it is very easy to create lookalikes of bullion and minted products.

WEIGHT

Although obvious, it is worth mentioning that a biased weighting of precious metal products has been observed throughout history and creates systematic damages to users. Imagine a 1kg gold bar weighting only 999 grams. You would say that this may be withing the acceptable limit of weighting error, but if done systematically, the refinery creates a 1gk gold bar every 1000 1kg gold bars. It is of course not much, but can make a difference. The weight of precious metal products can be easily verified by anyone and should therefore not be forgotten.

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TAMPERING

Product tampering can take on various forms. But the objective is again to artificially increase the product weight by the addition of less expensive materials. Examples are the opening and filling of gold bars with tungsten, plating of tungsten with gold, or even using lookalike metals. Similar to the purity issue, tampering is often difficult to detect and often refineries put technologies in place to increase trust in the brand.

TODAY’S SOLUTIONS FOR MINTED AND BULLION PRODUCTS

  • Serial Numbers: Most minted and bullion products carry a serial number allowing to track it back to production and follow it throughout the supply chain.
  • Certificates: Some products are shipped with a specific certificate to certify authenticity and quality of the product.
  • Security packaging: Some products, especially minted products, are shipped in a security packaging protecting the product from tampering and also guarantee authenticity and quality.
  • Special security features: Certain refineries add special features onto bullions and minted products. These features can be of different nature and may require special revealing devices. Examples include, holograms, invisible inks (UV, IR), optical variable inks, fluorescent inks, moiré-based features, etc.
  • Fingerprint Solutions: More sophisticated approaches register fingerprints of minted or bullion products. By linking this to the serial number, it is possible to provide a very high security as it allows 1) authentication of the product and the underlying brand; 2) detection of product tampering, such as drilling and filling. Fingerprint solutions are, for example, provided by AlpVision. Authentication is performed using a simple smartphone. Find out more.
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