Short version, if you buy precious metals, have the metal tested for purity before you agree to the sale.
See below for the long version.
It turns out underground bunkers in Idaho are more expensive than I anticipated. With the recent increase in the price of gold, I sold some of the gold I had. This allowed me to continue construction of the bunker in a timely manner.
I had a big scare when the two different buyers refused to accept some of my one-ounce gold bars. They tested it on a machine which checks for purity, and it failed:
It was all from one mint and looked like this:
I had three bars which passed and a few others which did not. The QR in the lower left had corner on the back gave the following information (with the appropriate serial number for each) for the bad bars:
OPM Metals I37326291S
1 oz
7/27/2015
The good bars all had a different date.
I tried going to the website, OPMMETALS.COM, shown on the back. The website does not exist. Due to acquisitions, ownership changes, and scandals* OPM is no longer a current business name. Nor is it an active mint. That path was a dead end for resolving my problem.
I could not find any information on the web about OPM bars being fraudulent or less than stated purity.
I went to the store where I had purchased the bars. This is Bellevue Rare Coins in Bellevue Washington. They used the same model of purity tester as the other two stores and came up with the same results. I had bars which were not pure gold. I had no way of proving I had purchased those bars from them. The serial numbers are not tracked on the receipts.
They carefully examined the packaging. It passed the black light test. The material and cutting of the edges all looked identical to the known good bars.
Upon close visual examination of the bars, he found an imperfection of the die on one bar. The same imperfection existed on both a bad bar and good bar minted a few days later. Only the serial numbers and the date of minting distinguished the good from the bad bars.
He offered to do mechanical and chemical tests on a bad bar. If they passed, he would pay 96% of spot price as opposed to the typical 98% of spot. I accepted.
He removed a bar from the packaging and did more black light testing on the seal. It passed. He easily bent the bar with his fingers. It passed the ping test. He did a nitric acid test. It passed.
I took the 96% of spot and felt very relieved. I came back the next day with all the OPM bars I had. All the bars minted on 7/27/2015 failed the test on the machine. This time they paid me 98% of spot.
I wondered why they paid me the same price as that for a good bar. But, I did care enough to find out. I was just relieved to get the market rate.
Doing some more research on the topic today, I found this article:
Ohio Precious Metals – 1oz Gold Bar – Curiosity of the Month
OPM Collectors
While OPM is no longer producing new products, there is a healthy second hand market for their previously minted rounds and bars. Collectors still prize bullion from Ohio Precious Metals. Products are stamped with the letters ‘OPM’. The company prided itself on conflict-free materials sourcing and had a commitment to sustainable environmental practices.
While its association with the Elemetal gold smuggling scandal may give some investor’s pause for thought, most collectors and investors continue to give OPM bullion high marks for quality and purity.
Perhaps, there are collectors willing to a premium on OPM products. If Bellevue Rare Coins knew they could sell the bars to a collector, then paying me full price was a good deal for them. Perhaps, even the impure gold would make it a collector’s item.
Perhaps, they believed that I had purchased it from them, and they wanted to “make it right by me.” I don’t know. I just know that if I buy more precious metals, I will ask the seller to test the metal in my presence.
* The scandal was related to buying gold from illegal mines in South America. It was not associated with impure gold bars.
Buying PM’s will always have the risk of counterfeits and fraud. Buying from a reputable dealer limits this risk but never eliminates it. Gold is fairly easy to counterfeit as Lead is very similar in density. Silver is much harder to because there is no other comparable metal in density. But that doesn’t stop people from trying and others from falling for the fraud. Caveat Emptor Once you learn the sound of genuine coins the “ping” test is a pretty good indicator.
Ummm… you sure about that?
Gold Au: 19.3 g/cc
Tungsten W: 19.25
Osmium Os: 22.59
Silver Ag: 10.49
Lead Pb: 11.34
Copper Cu: 8.96
Molybdenum Mo: 10.28
It’s almost trivial to come up with an alloy with a density similar to silver that is cheaper per pound. A major problem is the “ping test.” https://www.youtube.com/watch?v=GajK6Vrh2Rs
OTOH, only a handful of materials are similar in density to gold, and they are either expensive or very difficult to work. Gold is about 1.7x denser than lead, so gold-washed lead is easily detectable by simple density test. The most common “quality” forged gold coins and bars have a tungsten alloy core, but they fail the sound conduction test.
It’s crazy how even established mints can cause these kinds of issues. If a company goes out of business like OPM Metals, it seems like there’s little recourse for buyers. Definitely a reminder to be extra cautious about where you get your gold.
It’s wild how much trouble a simple mint change can cause, especially when there’s no clear record of what went wrong. I imagine it’s tough to figure out how to handle gold with so many variables. Are you looking into any backup methods for gold verification in the future?
How prevalent is the entire chain of gold – from buying to eventual sale – suffering from similar corruption?
Were “conditions to deterioriate” to the point where a quantity of gold was the delta between hardship and advantage, how marketable – in real terms – is gold, especially in the one ounce range?
Gold enjoys a material density that concentrates value, but I’m wondering how valuable it really is; were post-apocolypse life to occur, the value of anything, from gold to baked beans is “what I can use it for in an exchange process.” My perception is that gold, while having high per-unit value, might be less valuable were conditions to exist that limit its long term exchange utility. I suspect that as long as storefronts for it exist it will retain its value, at least most of it; without that easy and commonly trusted exchange structure, it may not be as valuable, if for no other reason than psychological trust may decline.
What would be a suitable alternative replacement, however, I do not know, certainly very few things as conveniently dense.
Perhaps between your first and second sale of bars they fired up ye old internet and did a bit of research and discovered their dissatisfied customer founded a precision rifle clinic where people have been blowing up hundreds of pounds of explosives each year for over a decade? And that’s why you got full price the second time around…
Maybe. But I never displayed any hostility. I just wanted help to salvage whatever value I could from my less than perfect pieces of metal.
Oh, and it’s over a ton each year for over two decades.
I can’t tell from the picture what the assay was. You said it failed the purity test — by how much?
I don’t know. As near as I could tell, it was a pass fail test.
This particular tester uses resistivity rather than X-ray spectroscopy. Hence, it probably can’t determine the actual percentages.
The Sigma/Metalytics machine depicted can give an analog result. It’s not quite as informative as X-ray devices, but it’s affordable to small investors.
I actually visited their factory awhile back, and was impressed: It reminded me of the microcomputer industry in Orange County, CA in the early ’80s, in that it was a small startup, didn’t spend all it’s money on furniture, sales, and otherwise trying to impress “investors” (in the early 80’s most tech startups were engineer funded, not “entremanures”). The engineers were very young, dedicated (long hours, likely salaried), rode to work on rice rockets which they parked in the hallway (where they could see them from their workbenches)… workbenches, not offices.
I likely should get one of these things: https://www.sigmametalytics.com/collections/precious-metal-verifiers
The XRF type things are a LOT more. https://www.amazon.com/Handheld-Precious-Analyzer-Testing-Analyzers/dp/B0BWHGSSKB for example
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