Royal Canadian Mint’s Tungsten Twostep?

Submitted by Rob Kirby:

Back in 2009, the Royal Canadian Mint [RCM] claimed that it had lost $15 million worth of gold bullion. What ensued from the time the loss was made “public” can best be described as a ‘fumbling exercise’ where – initially – different accounts were put forward as to the reason for the loss.   Finally, public catcalls regarding this loss at one of the world’s most renowned Mints led to an official investigation by the Royal Canadian Mounted Police [RCMP]. 

In the end, we were all told that this loss was due to honest miscalculations and blunders, or in other words – LAX CONTROLS.

Lax Internal Controls at the ISO 9001 accredited Royal Canadian Mint?

Here’s where we deduce why the Royal Canadian Mint circulated a “false, incredulous story” about how they lost $15 million worth of gold bullion:

In the face of unprecedented demand for gold maple coins and with physical supplies of gold being tight in 2009 – it makes sense that the RCM would have “borrowed” gold bullion from one of their customers whom they store bullion for I have been told by industry insiders that the RCM does not assay gold bars when they take them in for storage.  When the RCM tried to melt these bars, they were revealed to be tungsten – which melts at a much higher temperature than gold.  This created a very awkward situation for the RCM – having to tell one of their customers that they had stored salted [tungsten] bricks of gold.

 

It’s elementary(?), Watson — (December 21, 2009) A series of miscalculations and blunders in its gold refinery dating back to 2005 were responsible for 17,500 troy ounces of gold going missing from the mint’s Sussex Drive inventory count last October, the mint announced in a 12-page report. That’s the equivalent of almost forty-four 400-ounce bars and worth more than $20 million in today’s prices.

More than $3 million in government gold was unwittingly sold off at a fraction of its value as refinery slag, while $8 million more was miscounted and never left the Royal Canadian Mint, the Crown corporation revealed today in a full accounting of how it lost track of a fortune in gold for a year.

The mint said a 14-month hunt to find out what happened to the precious metal now “fully accounts” for the missing gold, though it admits almost 3,500 ounces unwittingly sold off in slag to U.S. re-refiners will never be recovered.

“These reviews have bolstered our reputation by strengthening the mint’s accounting practices, vindicating our security systems and confirming that our technical procedures and expertise in other areas are superior to industry standards.”

-end-

As evidenced from the Royal Canadian Mint’s 2009 Annual Report – the mint has been an ISO member since 1999.  Furthermore, the mint “upgraded” it’s Ottawa operation’s ISO designation to the ISO 9001: 2008 standard – IN 2009.  Achieving this standard requires a rigorous 3rd party audit. 

Also worthy of note, the 2009 RCM Annual Report contained NO REFERENCE to AN investigation by the RCMP – its conclusion or its results – nor ANY mention what-so-ever of the $15 million loss in the bullion department.  It’s like it never happened.

About ISO 9001

Contents of ISO 9001

….Before the certification body can issue or renew a certificate, the auditor must be satisfied that the company being assessed has implemented the requirements of sections 4 to 8. Sections 1 to 3 are not directly audited against, but because they provide context and definitions for the rest of the standard, their contents must be taken into account.

The standard specifies that the organization shall issue and maintain the following six documented procedures:

  • ·         Control of Documents (4.2.3)
  • ·         Control of Records (4.2.4)
  • ·         Internal Audits (8.2.2)
  • ·         Control of Nonconforming Product / Service (8.3)
  • ·         Corrective Action (8.5.2)
  • ·         Preventive Action (8.5.3)

In addition to these procedures, ISO 9001:2008 requires the organization to document any other procedures required for its effective operation. The standard also requires the organization to issue and communicate a documented quality policy, a Quality Manual (which may or may not include the documented procedures) and numerous records, as specified throughout the standard.

The picture below would suggest that the ISO 9001 designation really means something to the folks who run the RCM – since they have proudly sewn its facsimile into the garments worn by the folks who handle their bullion – as evidenced in both their 2009 and 2010 Annual Reports:

 

If the RCM had internal controls “lax enough for the accidental discarding of $15 million worth of gold” – dating back to 2005 – they would have been UNCOVERED IN THEIR 2009 ISO AUDIT and they would never have received their ISO 9001: 2008 designation.

So What Does Make Sense?

The tungsten gold thing has recently been back in the news.  Reports of 10 oz “salted bars” in N.Y. have surfaced, but, to date….no one has admitted to finding a large bar – like a 400 oz “good delivery” bar.

My research and contacts in the international bullion business tell me they do exist and these bars are “silo-d” around the world.

The story offered for public consumption by the Royal Canadian Mint about how they “lost” $15 million bucks worth of gold bullion back in 2009 – put simply – is a DOG THAT DOES NOT HUNT – unless you believe that dogs can and really do eat homework.

 

FACT:

                                       The Royal Canadian Mint At A Glance

The Royal Canadian Mint functions as a commercial Crown corporation, directed to conduct its affairs “in anticipation of profit”, as mandated by s. 3(2) of the Royal Canadian Mint Act.  As a result, the Mint does not rely on any taxpayer support to fund its operations.

Although the Mints stores large quantities of gold within its high-security facility in Ottawa, on behalf of customers and for its own operational needs, the Mint does not store any gold constituting reserves of the “national treasury” or the Bank of Canada.

Back in 2009 there were widespread reports of physical stocks of gold bullion being “very tight” as evidenced by the suspension / curtailment of U.S. Gold Eagle Production by the U.S. Mint:

          2009 Gold Eagle

 

2009 American Gold Eagle

The 2009 Gold Eagle had its product options significantly curtailed from the previous year. Strong worldwide demand for precious metals created sourcing problems for the United States Mint that impacted both bullion and collectible coin offerings.

The United States Mint offered the one ounce version of the bullion coin throughout most of the year. The offering was subject to order rationing from the beginning of year until June 15, and then once again from December 15 through the end of the year following a brief suspension. The fractional weight 2009 Gold Eagle coins were available briefly during the month of December when the US Mint offered a limited quantity of 1/2 oz, 1/4 oz, and 1/10 oz coins.

In October, the US Mint announced the cancellation of the the planned collectible versions of the 2009 American Gold Eagle. Collectors had been expecting one ounce 2009-W Uncirculated Gold Eagles and a full range of 2009 Proof Gold Eagles. In the same announcement, the US Mint also cancelled the collector versions of the 2009 Silver Eagle….

Back in 2009, Royal Canadian Mint was facing unprecedented demand for gold Maple coins with little to zero “working stock” of gold bullion to make them.  At the time, the Mint’s ability to access gold bullion was impaired due to the fact that the Canadian Government had previously sold all of its 660 metric tonnes of sovereign gold bullion.  

Here’s where we deduce why the Royal Canadian Mint circulated a “false, incredulous story” about how they lost $15 million worth of gold bullion:

In the face of unprecedented demand for gold maple coins and with physical supplies of gold being tight in 2009 – it makes sense that the RCM would have “borrowed” gold bullion from one of their customers whom they store bullion for.  I have been told by industry insiders that the RCM does not assay gold bars when they take them in for storage.  When the RCM tried to melt these bars, they were revealed to be tungsten – which melts at a much higher temperature than gold.  This created a very awkward situation for the RCM – having to tell one of their customers that they had stored salted [tungsten] bricks of gold.  Can any of you imagine what would have happened if the offending counterparty simply stated, “they were pure gold bricks when we gave them to you for safe keeping”?  To prevent a scandal of all scandals from ensuing, the RCM simply says, “We’ll eat the loss on the bars we tried to melt”.

This makes sense.  This is ALSO consistent with the RCM’s later action – in 2011 – when they launched a gold ETF – as a means of securing dependable working stock [or monetization of additional tungsten, perhaps?] for its gold maple coin program:

 

Royal Canadian Mint’s gold-backed ETF alternative raises $600 million

November 24, 2011

The Royal Canadian Mint has a hit on its hands after raising $600 million from the sale of its exchange traded fund alternative, exchange traded receipts backed by physical gold bullion held in the mint’s facilities in Ottawa, Ontario……

 

There no doubt will be charlatans in both the mainstream as well as the alternative press who will claim that none of this constitutes evidence to ANYTHING.

Everyone is free to come to their own conclusion[s] whether or not serial, deceiving or fallacious tales involving officialdom’s accounting of gold constitute evidence of wrongdoing or not.

On our little blue planet, when people are shown to be lying – there is usually a very good reason and it’s usually because they are hiding something.

Rob Kirby

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Comments

  1. When things get tough, LIE!

  2. I followed this little soap opera of the MISSING GOLD in the local press and dismissed the “faulty accounting and loose controls” as bullcrap.  People who work at the RCM are both proud and good at what they do, in addition to the ISO designation, cause I know a couple and this story puts it right by me.  Kinda like Ochem’s Razor, the simplest explaination is the right one !!
     
    Good Job Rob Kirby, the other story is and was crap.,,,   “faulty controls” my big bad rat !!
     
    http://www.denaliguidesummit.blogspot.ca/

    • Would agree with everything except the “good at what they do” part.  Our circulating plated coinage made after 2000 is absolute crap and I have even written the mint to tell them so.  It’s not unusual to find post 2000 Canadian coinage that is actually rusting after only a few years in circulation!  Speaking with their quality control guy in Winnipeg his attitude was something like, “well they’re only designed to live a few years, so who cares?”.  Who carries rusting steel slugs in their pockets or purse?  The original RCM staff roll in their graves.

      The quality of the Canadian Maples and commemoratives are still some of the best in the world though.

    • Sorry, pet peeve regarding Occam’s Razor.

      The simplest explaination is NOT always the right one.  People need to be aware that Occam’s Razor is not that the simplest reason must be right. Occam’s Razor is essentially only a guide towards generating a baseline hypothesis and developing reasoning beyond there.

      It is often cited to claim that one particular reason is valid due to its simplicity, but unfortunately this is an easy way out to explain things…. and as a result lends oneself to the possibility of manipulation.

    • I just wanted to add about what fonestar was talking about our currency today. It is rare to find pre-1999 Canadian coins in our circulation as the Canadian Mint hoard the coins made out of nickels and copper to replace them with cheap steel coins. Even the Canadian Maple Leafs have lost their prettiness. Before, they used to be in proof condition but now, they aren’t. 

  3. What an interesting piece !
     
    I heard that the RCM had lost gold……it would seem utterly impossible for anyone to walk out with gold, or to not to totally account for the gold stored there .
     
    It seems that if they got duped, and had tungsten filled gold bars, this could explain everything !
     
    Time to air that dirty laundry.

    I’ll be really pissed if it turns out that they had tungsten gold, and covered it up. Heads should roll at RCM!!

    Maybe, I’ll contact my MP about this. Yeah, I will.

    • Exactly! 15 millions of dollars worth of physical gold bullion can not disappear like that all in a sudden especially with the high securities at the Canadian Mint’s gold reserves. It may have also been a mistake in their services when they’ve delivered other previous gold bars.

  4. Very interesting article BUT is it true? I know in my heart Banksters can’t be trusted but is this just another Tungsten filled story to appease the masses in their quest for the PM manipulation? Good story nonetheless.

  5. Keep dreaming you guys. It was an obvious screw up but not a cover for fraudulent Tungsten. Had it been so the Mint would have leapt on that explanation to limit its own culpability in making such an egregious error. The problem lies with internal controls and that is where the buck stops.

    • Well, Ive sent my MP an email, and we will be asking if the RCM has EVER encountered a problem with tungsten in the gold.
       
      If there was, this will be a scandal of epic proportions.

    • Lol, you contacted your MP?

      You know what they’ll say?  “Yes, thank you for your concern, I will make immediate inquiries and will respond as soon as possible.  And don’t forget to vote for me in the next election.”

      1 week later you’ll get a reply “The RCM has confirmed that they have never had a problem with tungsten.  Thank you for your concern.”

  6. Eric Sprott’s PSLV is in their tungsten storage area… oh noes!  He might need to re-think his choice of a custodian.
    Find a better place- like a root cellar under his house.  heehee
     

  7. The fact that the Chinese are re-casting … every single so-called good delivery bar they receive … has sat in the top drawer of my mental cabinet since I first learned of the practice. That’s A LOT OF WORK and it’s illogical to embark on … unless … they were ripped off! I’m wondering if a truly huge ‘tungsten story’ is what Sinclair has been hinting at for months. If a major government were to break news of a significant amount of this counterfeit in circulation, with proof of the plot being hatched through collusion among the bullion banks … ALL UNHOLY HELL WOULD BE UNLEASHED throughout the currency and financial networks within moments.

    • all governments are in collusion with each other (in regards to gold) until they’re not.  None of them want publicity.  They are all governments and are in it for themselves – paramount is their security to rule. They will sweep problems under the rug as long as they can. It’s only when the problem assumes massive implications or the fraud is so great, that TSHTF.

    • Collusion is over if it ever even happened. Countries are scrambling for gold and the gloves are off with repatriation requests.

    • When the whole world discovers that the gold markets were manipulated with the tungsten plated with gold, gold’s price will skyrocket and the whole mass will start buying some more physical gold pieces.

  8. As a (retired) quality professional (in aerospace), I can assure you the ISO angle in this story is way off base!

    ISO:9001 designation does not speak to the quality of the product, it simply confirms the Quality Management policies and procedures meet the international standards. These standards are universal across all industries (your local car dealer can achieve the same designation), and they would not include specific requiremnts to assure the purity of the metals… it simply does not get that process specific.

    To close, ISO:9001 is a framework for documented controls… the level and effectiveness of those controls are outside the scope of the certification (although repeated, serious issues would be a concern during follow up reviews) and, in the RCM case, would not constitute any guarantee of purity.

  9. The system is duped, doped and with little hope.  Trust, nope.  Verify, Yup.  Recasting each bar says it all.  China is wise to not trust the western powers.  These powers are losing gold, maybe lost most of it. Sending tungsten salted to China will be long remembered by those who could be our masters years in the future.
      When in doubt, obfuscate.  That Latin for Tungsten. For some reasons that i have not deduced, this should work well for us simple stackers.  Maybe the disappointment with gold will shine a favorable light on silver.

    • Who knows if China is receiving those tungsten plated with gold in their reserves. Maybe the Chinese are verifying their bars with radio scans or something like that to see if there are any tungsten inside. 

  10. Our choice is to either believe the RCM accidentally threw away $15M worth of gold(Hard to believe with the tight controls used by mints) or the gold they “borrowed” to mint coins was tungsten gold.(Makes more sense considering what we know now.) 

  11. Back in 2009, the Royal Canadian Mint [RCM] claimed that it had lost $15 million worth of gold bullion. What ensued from the time the loss was made “public” can best be described as a ‘fumbling exercise’ where – initially – different accounts were put forward as to the reason for the loss.
    -  -  -  -  -  -  -  -
    This reminds me of a late 1980′s story from the National Laboratory in Oak Ridge, Tennessee *.  It seems they had lost quite a bit of nuclear material, but insisted that it was just a paperwork issue.

    Funny how history always rhymes. 

    * where the first atomic bombs were made   

  12. Whatever happened to personal responsibility?  Seems like anytime our fearless leaders screw up they simply say “whoops” and then promise to “put in controls and/or procedures to prevent this from occurring again.  No one ever accepts responsibility and basically others just get a hand slap.  Amazing!

    • Either that or they SAY that they accept responsibility for some egregious screw-up and then nothing ever happens to them because of it.  Talk is cheap.  A Japanese businessman who accepted responsibility for something of this nature would be getting out his red rug and sharpening up his knife.

  13. why would the mint give them real gold for their fake gold they found.. why not give them fake gold bars.. why use up 15million of real gold in such a shortage issue… article sounds very fishy 

  14. RCM now selling coins from before WW1. Doesn’t look like they have many gold/silver bars on the shelves. ahahaha

    http://www.theglobeandmail.com/report-on-business/video/video-mint-releases-rare-gold-coins-for-public-sale/article5774895/

  15. I’ve worked in metals most of my life (while still in highschool my first job was a blast furnace) and I refuse to believe anyone at the mint wouldn’t know the difference between the product and the furnace slag! BS. If there is a next time will they say it was sold as dross.

  16. “Here’s where we deduce”….. another tungsten story with no facts.  I especially love when a paragraph starts off with quotes, but doesn’t say who is being quoted.  The author, Rob Kirby?  What’s even better is that there are no closing quotation marks.  I’m glad to see that there are others voicing their doubt about this article.

  17. They lost 15 millions of dollars worth of gold bullion like that all in a sudden? How could they lose that much amount of physical gold like that? I hate the fact that our government sold all of our gold reserves while most of the people didn’t even cared about that.

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