Gold Doré and "LBMA" Bullion Fraud: Assay, Chain of Custody and Refinery-to-Vault Delivery

Gold doré and "LBMA" bullion fraud rank with EN 590 and ICUMSA 45 among the oldest commodity scams, and they survive because gold is small, valuable and emotionally persuasive. The offers come in two forms: doré or "AU dust" from Ghana, Uganda, Kenya, the DRC, Mali or Guinea at a large discount, and "LBMA bars in a vault" in Dubai, Zurich, Hong Kong or London available for immediate sale. Both end the same way unless the buyer insists on assay, chain of custody and refinery-to-vault delivery.

How gold doré and bullion fraud actually works

In the doré version the seller presents an assay report, an export licence, photos of bars and often a video of a "government assay". The buyer is asked to pay for one or more of: a refundable deposit, export taxes, security escort, an "assay office fee", airport handling or demurrage on a plane that is already waiting. Each payment unlocks a new obstacle. Where gold does appear, it is a bar of brass, tungsten-cored or gilded metal presented at a meeting; the sample tested is real and the shipment is not.

In the bullion version the seller claims allocated Good Delivery bars in a named vault and offers a procedure such as SKR, bank-to-bank verification or "SBLC against bars". The vault, if real, has never heard of the seller; the safekeeping receipt is a forgery; and the aim is to extract a bank instrument, a deposit or a fee for "vault verification".

Rule: gold is paid for after an accredited refiner or an LBMA-approved vault has received it, assayed or verified it and confirmed that in writing to the buyer; any payment or instrument issued before that point is a payment for a story.

What a genuine assay looks like

An assay is a laboratory determination of fine metal content on a representative sample. For doré, the only assay that matters commercially is the refiner's own fire assay (cupellation) carried out after the lot has been melted and homogenised, because the composition of unmelted bars varies from bar to bar. Pre-shipment assays by an independent laboratory or by a national assay office are useful indications but are not settlement figures. A document that gives a purity of "92.8 %" for a lot that has not been melted together is at best an estimate of a sample.

For bullion, LBMA Good Delivery bars carry the refiner's stamp, serial number, year, fineness of at least 995.0 and a gross weight between 350 and 430 troy ounces. The LBMA publishes the Good Delivery List of accredited refiners; a bar stamped with a refiner not on that list is not Good Delivery regardless of the certificate attached.

Chain of custody from mine to vault

A verifiable gold transaction leaves a paper trail at every hand-over, and every party on that trail is a regulated or licensed business:

1. Origin: a licensed mine or an aggregator licensed by the national minerals authority, with an export permit naming the lot, weight and consignee.
2. Export: a customs declaration and, where applicable, a Kimberley-style regional certificate or an OECD due-diligence record, with a secure logistics company (Brink's, Loomis, Malca-Amit, Ferrari) issuing an air waybill.
3. Refining: receipt by an accredited refiner under a refining agreement, melting, assay, settlement on fine ounces at the LBMA Gold Price less refining charges.
4. Allocation: fine gold credited to the buyer's metal account or cast into bars and delivered to an LBMA-approved vault, with the vault issuing an allocated-metal statement listing bar numbers.

A seller who cannot name the licensed exporter, the logistics company and the receiving refiner is not describing a chain of custody.

Refinery-to-vault delivery: the only safe structure

The structure that removes fraud from a gold purchase is simple. The seller consigns the doré to an accredited refiner at its own cost; the refiner assays and reports fine content to both parties; the buyer pays the refiner's settlement price for fine ounces into the seller's account only after the refiner's assay report has been issued; and the fine gold is delivered from the refinery to the buyer's vault account. The buyer carries no risk before assay, and the seller is paid the full market value minus refining charges. Genuine sellers accept this because it is exactly how they would be paid by any trading house. Fraudulent sellers decline it because the gold does not exist.

Red flags that end the conversation

• Discounts to the LBMA Gold Price in the range of 10 to 30 %
• Any upfront fee, tax or escort cost to be advanced by the buyer
• A "local refinery" or "government assay office" whose report settles the price
• SKR, "bank-to-bank" or "hard copy via bonded courier" procedures for bullion
• Gold described as "AU dust", "alluvial gold 22+ karat" or "in secure vault awaiting buyer"
• Pressure to meet in person to "see the gold" at a hotel or airport facility

Sanctions and due diligence

Even where gold is real, buyers must satisfy the OECD Due Diligence Guidance for responsible mineral supply chains and the LBMA Responsible Gold Guidance that refiners apply, plus EU and US sanctions on gold from certain origins. A refiner will refuse a lot without documented provenance, so a buyer who takes doré outside the refinery route also takes on the problem of selling it. That is one more reason why refinery-to-vault delivery is the only structure worth discussing.