The counterfeit bullion trade has ripped off investors for thousands of years. The recent surge in precious metal prices has revitalized counterfeiters who today are equipped with advanced manufacturing technology that can fool even veteran coin dealers. Millions of unwary investors buy phony gold and silver bullion every year.
Earlier this year, Coin World reported on counterfeit American Prospector 1-ounce silver rounds being offered in the United States and fake 2011 American Eagle silver bullion coins surfacing in Canada. Fake 1-ounce Chinese Panda bullion coins were found in Cincinnati this year. There are increasing numbers of counterfeit coins showing up, and counterfeiters can produce near-exact copies of mint dies using laser-imaging 3-D technology. Today’s high quality counterfeit bullion can be very difficult to spot, but you can learn to properly authenticate your precious metals.
The Global Piracy & Counterfeiting Consultants is calling counterfeit U.S. Silver Dollars, precious metal, coins, or bars, or counterfeit gold coins, a global economic train wreck waiting to happen, courtesy of the Chinese. Ten percent of China’s gross domestic product is related to counterfeiting, and the Global Piracy & Counterfeiting Consultants fears the problem is much worse than anyone knows.
What is the difference between counterfeit and copy bullion coins?
There is a distinction between “counterfeit” and “copy” bullion coins. A “copy” is a coin that’s design is borrowed from another coin. These coins may or may not be made of precious metals. Legitimate private mints often use copies of popular coin designs on their bullion. The term “copy” or “replica” refers to the design, and is not intended to deceive the buyer.
A “counterfeit” or “fake” bullion coin is made to intentionally deceive the buyer. It misrepresents the metal content. Various metal alloys are used to create counterfeit bullion, and some may include a low percentage of precious metal.
A counterfeit gold bullion coin may be minted mostly in gold. Counterfeit gold sovereigns produced in the 1950s and 1960s were minted with an alloy consisting of only 60% to 80% gold, instead of the proper 91.6%.
In the case of a counterfeit silver bullion coin from China, most are made of base metals that have been plated with a precious metal. It is usually made of a base metal planchet (a coin blank) that has been stamped and plated in silver. It is marked as a one ounce .999 fine silver (Ag is the chemical symbol for silver) bullion coin.
Many purported silver pieces that have been proven fakes were found to contain no silver at all. Most have been composed of various concentrations of copper, nickel and zinc in place of the .999 fine silver found in most genuine silver bullion items, according to Coin World.
Distinguishing between real and fake bullion coins is not easy for the novice, but there are a few simple techniques that anyone can use to identify a fake.
- Use a Magnet. Pure gold and silver are non-magnetic. If a bullion coin sticks to a magnet, it’s a counterfeit. China produces much of its counterfeit bullion with iron-based planchets. A magnet is a cheap, easy way to detect this type of counterfeit. A magnet can’t indicate a coin’s metal content with precision. There are fake bullion coins that pass the magnet test.
- Gold and Silver Acid Tests. Acid tests will ensure the legitimacy of bullion. Gold will not react or dissolve in nitric or sulphuric acid. A legitimate Gold Eagle would not react to a spot of nitric or sulphuric acid. Acid solutions to test silver are also available. Acid tests damage a tiny portion of a coin, devaluing it. It’s not an ideal test for investors with small bullion holdings, but if you own a large amount of bullion, testing a few coins wouldn’t hurt.
- Use a Counterfeit Gold Coins Detector. There are simple counterfeit gold coin detectors on the market. The detectors check for three fundamental traits of a legitimate bullion coin: weight, diameter and thickness. A good counterfeit gold coin detector on the market is the Fisch Fake Coin Identification Gauge. Its only flaw is that it does not work for all gold coins. Fisch makes different-sized detectors. The Fisch Fake Coin Identification Gauge is priced starting at $169.00. It would be cheaper to have your bullion authenticated by an expert.
- Know the Weight of Bullion Coins. A major indicator in authenticity is a counterfeit bullion coin’s weight. Gold is a very dense and heavy metal. A counterfeit gold coin will almost always be too light in weight. The same can be said for counterfeit silver coins. Weigh your bullion using a reasonably accurate scale. Keep in mind the difference between 1 troy ounce (31.1 grams) and 1 avoirdupois ounce (28.3 grams). Gold and silver bullion coins are supposed to be 1 troy ounce.
- Know the Correct Dimensions of Bullion Coins. Fake bullion coin is often made with incorrect diameter or thickness. Counterfeiters often alter the dimensions of bullion coins because the metal alloys used add weight. You can find the true dimensions of a bullion coin in the catalog or online store of legitimate government and private minters. Use a reasonably accurate set of calipers and take measurements. Bullion coins with inaccurate weights or dimensions are usually fakes.
- Check Color, Quality, and Content. Closely examine the quality and color of the metal. Phony gold coins often appear too shiny or too dull, and often look casted and not pressed, leaving a grainy texture. Other counterfeit bullion coins might be mottled on the surface, or have tool marks or misshaped edges. Counterfeit gold coins are sometimes made of two pieces that are glued or soldered together. A seam on the rim of a gold coin indicates that the coin is counterfeit. Use a magnifying glass or jeweler’s loupe to compare the details of your coin to one you know is authentic. You can use a close-up photo of the real coin online to compare. Check the space between letters, compare the size, and look for differences between the two coins.
- Buy Bullion From A Reputable, Licensed Dealer. Buy gold and silver bullion from an accredited bullion dealer. Avoid private party transactions. If you’ve already purchased a suspected fake, get your investment appraised by a reputable dealer. If you were sold counterfeit bullion, you can then take action against the offending dealer instead of waiting years to find out you’re investment is worthless.
The counterfeiters and their fake silver and gold bullion are becoming harder to detect as time and technology advances. Don’t take chances with your investment. If you have further questions about counterfeit bullion coins, contact an accredited bullion dealer.