About Counterfeit Gold Coins
As on 6th September, 2011, gold prices hit an all time high of $1,900/oz. Along with this hike, some bullion coins prices soared too, some popular ones being the American Gold Eagle ($1,956.69 – $2,014.45), the South African Kruggerand ($1,948.65 – $2,001.18) and the Canadian Maple Leaf ($1,951.21 – $2,000.36).
As prices rise, people cash in on the opportunity by selling their bullion holdings. Investment experts are reporting an increase in gold trading with the rising prices. There are also increasing reports of a flourishing counterfeit gold coins market. The recent publication of a three part series by coinworld.com and a pamphlet by Aurum Advisors warning people to beware counterfeit coins is testament to such. So before investing your life savings in gold, make sure you know how to spot a counterfeit especially if dealing with a private party.
All that Glitters is Not Gold
The menace of counterfeit gold has increased with the advances in technology. With 3D imaging and laser techniques, producing a copy of the mint designs is not difficult and with the internet, one can reach out to potential first time gold buyers to dupe. There are essentially 2 types of counterfeits – a copy and a fake. A copy is the copy of the design of the coin and a fake means the metal content of the coin is adulterated.
Counterfeit Bullion coins: The best bet is to acquire bullion coins that are minted by a government because they have legal tender, have standardized weights and gold content. The best way to spot a fake bullion coin is to test weight and size. Coins that are made of other metals will either be too light or too big.
Beware of metals such as such as Tungsten, which has been known to be undetectable when mixed with gold, so lot of forged coins are just some gold around a tungsten center. You can test the gold coins for density because gold has a higher specific gravity than other metals, and you can test for that. Tests such as bite test (biting on the coin to check malleability), ring test (24 karat gold does not ring) or the Nitric Acid test are also ways of figuring out counterfeit coins. Also, familiarize yourself with the look, touch and feel of gold, sometimes a counterfeit can be spotted simply because it is too dull of too shiny.
Counterfeit Numismatic coins: The gold market is thriving with copies of coins designs because the numismatics are traded at a considerable premium over gold prices based solely on their designs. Every detail is vital, be it markings, details or individual words. Check everything before you buy it. The coins may be made of proper gold content, designs may even be copied to perfection and they can be artificially aged too, this is especially easy with the crude prehistoric designs but even with some new ones. If there is discoloration or some bumps etc. that are obvious markers of counterfeits. Make sure you buy the coins that have been graded by third party specialists like the Professional Coin Grading Service (PCGS) or Numismatic Guaranty Corp. (NGC).
Counterfeit gold coins are an inescapable reality. Sometimes, all tests done, the most experienced coin collectors land up with fakes and copies. There are in fact museums dedicated to these sorts of coins and collectors who like collecting these ‘replicas’. These collections are called ‘black cabinets’. The best way to avoid being conned is to establish use an established and accredited dealer that is known in the industry for integrity and accountability, and avoid using private party transacions.