Today, the same bar is worth $667,700. In just seven years, gold prices have jumped by 203%.
But it's not the eternal fascination with gold that has boosted the price. With growing levels of worldwide uncertainties, mounting inflation risks and government distrust, people are clamoring for gold primarily as insurance.
According to the World Gold Council, 2011 saw gold bars and coins reach nearly $77 billion in sales, versus 2002's $3.5 billion. And in November alone, the U.S. Mint's sales of the popular American Eagle coins jumped 131% in the wake of the election.
With the market for gold growing at a feverish pace, it's now more important than ever to know that your gold is the real deal-especially with gold prices looking to break through the $2,000 mark in the new year.
Gold counterfeiting is nothing new. In fact, just recently there were reports of fake gold bars from China turning up in New York. Instead of gold, their centers were stuffed with tungsten.
But rest assured there are a number of methods you can use to mitigate the risks of ending up with counterfeit gold. Some are simple, quick and inexpensive. Others are more elaborate, detailed, and not so readily accessible.
Here are seven ways to find out if the gold you own is real:
Fake Gold Test #1: Size Whether we're talking about coins, wafers, or bars, the producers of these items usually have very exacting standards. So a little research goes a long way to making sure you get what you expect.
Find out what the true dimensions of the item should be, then compare them to what you have.
To do this, buy yourself a good quality pair of calipers so that you can measure the diameter, thickness or other dimension of your gold item very precisely.
Gold is a very dense metal, so some counterfeiters may make a coin in a wider diameter, in order to compensate for a less dense metal. If you compare gold to iron, it takes twice the volume of iron to equal the same weight of gold.
Plating other metals with gold still allows them to match the proper weight, but the size would be off. The difference could be very minor, but if you know what to look for, you can spot the fake.
Fake Gold Test #2: Magnetic Gold is not magnetic. So if it sticks, your gold is fake. But to do this, you'll need a stronger than average magnet. The kind available from a specialized hardware store should do it.
Keep in mind that counterfeiters obviously know this too. So they'll typically use metals that aren't magnetic to avoid this type of detection.
Just don't use this test alone.
Fake Gold Test #3: Weight Obviously, one true and tested way of being sure you get what you ordered is by quantity. And weight is a great way of checking.
Get yourself a good quality, precise scale. Then, based on the stated weight on your coin, wafer or bar, it should match up perfectly.
Keep in mind though, that gold is weighed in troy ounces. One troy ounce is equal to about 1.09714 "avoirdupois" ounces, which is the normal 1 ounce measurement we use in everyday life.
Fake Gold Test #4: Visual Knowing what you're looking for will certainly help here. It's a learned skill, but keep an eye out for anything that looks odd or abnormal.
A decent, strong magnifying glass goes a long way to pinpoint oddities.
You can search for high quality images of your coin or bar, then compare that with what's in your hands. Be meticulous in your search for minute details, all of which must be spot on.
Gold coins are a good option for gold "investments." You see, counterfeiters will often (but not always), fake larger gold items because it's more worth their while. After all, if you're going to go through all of the painstaking trouble and risk, the payoff might as well be big.
The test methods I've described so far apply to pretty much any form of "investment" gold. But if you take the leap and acquire a larger-sized gold item, there are a few other tests that can be performed for veracity.
The truth is, anyone who owns gold in the form of a larger bar, say 10 ounces and up, ought to consider having it verified.
Fake Gold Test #5: Assay One option is known as the fire assay test. This is typically used by gold explorers/miners who require absolute certainty that their drilled samples are the real thing.
Fire assays are an ancient method. They are the most widely used and considered the most reliable. The downside is that it involves drilling into the gold bar to provide at least ½ gram (0.2 ounce) to be tested. Some feel removing even a small quantity of the bar will take away from its integrity. But some gold bullion dealers, for their own assurance, will decide to cut your bar if you've agreed to sell it to them.
Another downside with fire assays is that you're really only testing the small portion you've sent to the testers. So if there is a void or other metal in the center of the bar, the test won't find it.
Assay testers will usually take about three days and charge about $35 to test a gold sample. They'll also provide an official signed report with the results.
Fake Gold Test #6: X-ray X-ray testers are another option to check your gold. Jewelers will sometimes use these to test any gold they buy.
The tester quickly performs chemistry analysis to determine what elements are present in the gold. They also can tell the purity and fineness of the metal.
X-ray testing does have a ±1% accuracy rating, so while minor, there is some chance for error. The other drawback is that it's essentially a surface test, so if there's a void or another material in the center of the bar or coin, then X-ray testing won't detect it.
On the plus side, it's nondestructive and non-intrusive, so the integrity of your gold won't be compromised. You'll know, at least, if the surface of the item is real gold.
Fake Gold Test #7: Ultrasound Ultrasound testing is a way to "look into" your gold. It uses the same ultrasound technology familiar to all pregnant women.
Essentially, this method scans the item, providing a digital image of the gold bar.
If there is an air gap or other material inside the gold bar, this will show up as a darker area on the screen's image.
This is expensive equipment, so it may be challenging to find someone who could provide testing services.
The advantage is that ultrasonic flaw detectors can actually "see" the inside of your bar, so the results provide a high degree of confidence in the bar's integrity. If you want to see exactly how this works, click here to view a short video demonstration.
Of course, there are other tests you can do to mitigate your risk of ending up with a fake. Probably the single most important thing you can do is to buy your gold from a reputable dealer.
While it sounds obvious, a little research can go a long way. Ask friends or acquaintances for referrals and check the website of a government mint for "partner" bullion dealers.
Also, consider buying from dealers that offer a product guarantee, as well as a future promise to repurchase anything they previously sold to you.
Keep in mind, though, that the biggest counterfeiter of all is your own central bank. Since the 2008 crisis, the Federal Reserve has created trillions of dollars out of thin air.
So your best insurance against even more fiat money counterfeiting is to own some physical gold. Just be sure you know who you're buying from and what you're getting.
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