Tips On How To Protect Yourself From The Tungsten Scam

Recently, there have surfaced a few bars that proved to be gold-plated tungsten instead of gold. Over at iStockAnalyst.com, Mark Nestmann has this tip to prevent being taken: buying physical gold in small amounts, particularly in bullion-coin form. Unlike a bar, a coin is small enough to make it a lesser target for counterfeiters. More importantly, a coin can be subjected to a "ring test." The ring given off by a gold-plated tungsten coin is different from that given off by a real gold coin.

He also has a counterfeit-related tip for those who want to buy stored gold:

Also be aware of the differences between "allocated" and "unallocated" storage of gold. Allocated storage means that a bank or warehouse has specific coins or bars that you own set aside. Unallocated storage means that you have an ownership interest in a gold pool. Unallocated storage is therefore less expensive and a preferred storage option for many investors.

However, if a bank or warehouse has counterfeits in its unallocated inventory, it could potentially default on deliveries. That would almost certainly lead to its bankruptcy. You would then become an unsecured creditor and apply to the bankruptcy trustee for relief.