BEIJING(BullionStreet): A gold bar sold by China's state-controlled China National Gold Group showed signs of rusting, reports Beijing Times.

According to the tabloid, In October 2010, a man identified only by his surname, Shen, purchased what he believed to be pure gold product manufactured by China National Gold from a Beijing department store for 14,900 yuan ($2,400).

The bar was stored in a bank safe until Dec. 18, when Shen noticed that it had developed red spots and what appeared to be rust corrosion on the base. As the most non-reactive of all metals, gold should never rust unless it has been mixed with other metals or has been contaminated with additives.

On Dec. 24, Shen took the gold back to the store and was offered a refund once staff verified that it was the same item he originally purchased.

Shen refused, saying that all he wanted was an explanation. A spokesperson for China National Gold said the bar sold to Shen did not have any problems when sold and that further tests will have to be conducted to determine if the issue lies with the product itself or the manner in which it was stored.

Sources said that following discussions, China National Gold offered Shen three options: have the gold examined by a domestic specialist, sell the gold back to the company or have it exchanged for another product.

Shen said he is concerned about the country's gold testing standards and intends to have the product examined both in the mainland and in Hong Kong or in a foreign country.

China National Gold has said it respects Shen's decision and that as long as a legally recognized report indicates that their product is problematic the company will fully compensate him in accordance with the law.