There are some bad people out there who make a living from selling counterfeit coins and fake gold bars. This April's Fool Day, we've gathered a few tips on how to protect yourself and not get played for a Fool when buying precious metals.
Rule #1: Know Your Seller
Major bullion companies will stand behind everything they sell. If something bogus does slip through the cracks, they can consult their records and make it right. Be careful if dealing pawn shops, flea markets, garage sales, and private individuals, who may not have the expertise to catch counterfeits (or may be running a scam!).
Keep in mind that even “slab” capsules from the major grading services such as PCGS and NGC are now being faked. While a lesson in spotting fake slabs is beyond the scope of this article, buying from a reputable, licensed dealer is your best protection.
Beware of online sellers on auction sites, or people on the street. We recently had a man come in to sell us a gold bar he traded two of his pistols for at a gun show. You can imagine how he felt when we showed him that the bar was fake!
Does The Date Add Up?
Sometimes, criminals think they're smart. They will make counterfeits with an “impossible” date, such as a Morgan dollar dated from the WWI era. (Morgan dollars were not minted from 1905 to 1920.) This way, they can claim that the fake is a “fantasy” coin, and not a counterfeit. The US Secret Service teaches them the error of that line of thinking when they're caught.
Make sure any coin you're looking at has the year AND denomination.
Attraction Isn't A Good Thing
If you want to brave the wild jungle of private bullion sales, there are some things you can do to protect yourself against counterfeits. One of the easiest things is taking along a small magnet. Silver and gold are not magnetic, but fakes often are! Counterfeiters will take iron or steel, and plate a microscopically thin coating of gold or silver over it. A small rare-earth magnet will stick to the coin or bar, if it's a fake.
On a related note, many counterfeiters will wrap their fakes in bogus packaging, and print fake COAs (Certificates of Authenticity.) If someone is trying to keep your attention on the COA or pretty box, its an attempt to keep you from looking closely at the coin itself.
Music To Your Ears? (The “Ping” Test)
Once you've bought real silver, whether it's modern pure bullion like a Silver Eagle or Canadian Maple Leaf, or 90% silver like a Mercury dime, or Morgan dollar, you will quickly learn the sweet sound of silver hitting a tabletop. Most fake coins will have a dull sound, and once you know what the real thing sounds like, you can easily pick up on that. In fact, many people who “coin roll hunt” for old silver in the wild can tell you that they can tell a silver coin by hearing the cashier drop it in the register.
Precious Metals Verifier (PMV)
One of the newest innovations in precious metal security is the PMV, brought to us by Sigma Metalytics. These Precious Metal Verifiers are the cutting edge in bullion technology, capable of pinpointing between different purities and precious metal compositions, including 90% silver, sterling silver, Crown gold, 22-karat gold, and more. Even better, these handy products are available for under MSRP! They can be used to test coins, small bars, and even most certified (or "slabbed") coins. If you can catch even one fake gold coin with your PMV, the machine will have probably already paid for itself!
Size Up The Offer
Another good way to spot fake gold coins or silver coins is weighing them with a gram scale and measuring them with a micrometer or caliper. Since gold is much denser than most other metals, counterfeit coins that have the proper weight are ether wider or thicker than the real thing. Fake coins that are the right size will be lighter than real ones. Know what the measurements are for the type of coin you're buying!
Keep in mind that old worn coins may have slightly small dimensions and weight than when they were first made.
Watch For Sloppiness
Counterfeiters many times make mistakes when striking their fakes. Not only may the die be of poor quality, but most operations are not exactly known for exacting standards. For example, this fake 1879 Morgan dollar is struck off-center on the obverse, but not the reverse. Your first reaction when seeing this should be a magnet test.