By Richard Giedroyc
All that glitters is not necessarily gold. The current surge in the spot price of the yellow metal may have brought out investors, but it has also brought out the counterfeiters.
Caution is now the watchword when purchasing gold coins. Alarm bells have been sounded, but just how loudly they are ringing is open to debate.
At the heart of the problem is the metal composition of the most currently produced counterfeit gold coins. Since the traditional way of detecting fake gold coins is to weigh them counterfeiters are now using tungsten, which has a similar weight to that of gold.
According to an Aug. 6 Wall Street Journal newspaper report, “The mix of metals has improved the look and feel of fake gold, while online marketplaces such as eBay and Alibaba have made it easier to sell these products worldwide.”
Alibaba was suspended from the International Anti-counterfeiting Coalition in May. According to a June 13 CNN Money newscast, “Chinese-manufactured fake products are just as good – if not better – than the real deal, according to Alibaba founder Jack Ma.”
Several of the most recognized third party coin certification services have acknowledged counterfeits of their encapsulations also exist.
“These sales of counterfeit coins are potentially a multi-million dollar problem for the public,” said Dana Samuelson, Professional Numismatists Guild President.
Samuelson continued, “We conducted an informal inquiry of PNG members and PNG Accredited Precious Metals Dealers (APMD) about what they’re encountering now in the marketplace. They have seen everything from counterfeits of vintage rare coins to modern precious metal items. These include fakes of popular century-old U.S. Morgan and Peace design silver dollars to current gold and silver American Eagles, gold U.S. Buffalo coins, silver and gold Chinese Pandas, and Canadian silver and gold Maple Leaf coins. We’re also seeing spurious gold and silver ingots.”
The Wall Street Journal article quotes American Numismatic Association Education Director Rod Gillis as saying, “It runs the whole gamut. It can be scary out there.”
The same article quotes Scottsdale Mint (Arizona) President Josh Phair as saying, “If counterfeits enter the mix to a greater degree that could really erode confidence.”
Phair told the WSJ that counterfeits detected by his business have doubled within the past five years.
Just how big a problem counterfeit gold coins have become is in question. Numismatic Consumer Alliance spokesman John Albanese cautioned the WSJ, “They’re sounding the alarm bells, but I personally think it’s overstated.”
Overstated or not, both mints and distributors are defending their turf even before anyone breathes the word “fake.” The Royal Canadian Mint began adding micro-engraving as a security device to its gold Maple Leaf coins in 2013. The Perth Mint in Western Australia recently added microscopic images to its silver Kangaroo coins, with plans to add similar security devices to its other bullion coin products.
Smartphone apps that are capable of scanning gold and silver coins or ingots to help authenticate these products are actively being used by the Scottsdale Mint and the RAM, among others. These apps test the coins by the sound the coins make when struck. The more sophisticated a precious metal detecting app becomes, the less worry people should have about purchasing gold coins – hopefully.
This article was originally printed in World Coin News.
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