Gold Coin Balance Fooled by fake gold Eagle

[Reub]

Do we need to rethink the "safety" of purchasing physical bullion for our PP in light of the fact that we may be buying fakes and can't tell the difference?

[FarmerD]

Do we need to rethink the "safety" of purchasing physical bullion for our PP in light of the fact that we may be buying fakes and can't tell the difference?

I don't think we have to go that far yet.  So far only a few fake Eagles have been found.  There have been no reports of fake Maples, Phils, or Buffalos.  And to be super cautious, if you purchase current year dated Buffalos, they almost certainly come directly from the US mint so I don't see any real way they could be faked. 

[Kshartle]

Do we need to rethink the "safety" of purchasing physical bullion for our PP in light of the fact that we may be buying fakes and can't tell the difference?

I don't think we have to go that far yet.  So far only a few fake Eagles have been found.  There have been no reports of fake Maples, Phils, or Buffalos.  And to be super cautious, if you purchase current year dated Buffalos, they almost certainly come directly from the US mint so I don't see any real way they could be faked.

The US mint cannot allow any possibility of being accused of making fakes at this point. That would just about be the end for them.

[Stunt]

Do we need to rethink the "safety" of purchasing physical bullion for our PP in light of the fact that we may be buying fakes and can't tell the difference?

Do you stop using currency because there are counterfeits? If the coin is so good to fool you, it's good enough to fool the next guy you sell it to

[Reub]

Do we need to rethink the "safety" of purchasing physical bullion for our PP in light of the fact that we may be buying fakes and can't tell the difference?

I don't think we have to go that far yet.  So far only a few fake Eagles have been found.  There have been no reports of fake Maples, Phils, or Buffalos.  And to be super cautious, if you purchase current year dated Buffalos, they almost certainly come directly from the US mint so I don't see any real way they could be faked.

The US mint cannot allow any possibility of being accused of making fakes at this point. That would just about be the end for them.

Why would a coin dated 2014 almost certainly come directly from the mint? Don't counterfeiters know what year it is?

[FarmerD]

I don't think we have to go that far yet.  So far only a few fake Eagles have been found.  There have been no reports of fake Maples, Phils, or Buffalos.  And to be super cautious, if you purchase current year dated Buffalos, they almost certainly come directly from the US mint so I don't see any real way they could be faked.

The US mint cannot allow any possibility of being accused of making fakes at this point. That would just about be the end for them.

Why would a coin dated 2014 almost certainly come directly from the mint? Don't counterfeiters know what year it is?

The US mint only sells current year coins then distributes them through their authorized dealers.

http://www.usmint.gov/mint_programs/ame ... le_bullion

So the chain of custody here is US Mint---->authorized dealer------->you. The only realistic way a fake coin dated with a current year could be introduced would be if some end customer sold back a current year dated coin.  I imagine there are extremely few people who have bought a current year dated coin earlier this year then quickly resold back to a dealer.  So I'm 99.9% sure the current year dated coin is from the mint. 

On the other hand, for a random year dated coin, the chain of custody is US Mint------> authorized dealer----->customer------->some other customer------>some other customer------>dealer------->you.  The longer the chain, the more opportunity there is for a fake to be introduced into the system. 

[MachineGhost]

While it doesn't apply to pedestrian bullion, this is another reason to stick to slabbed, graded and certified semi-numismatic gold coins besides getting a juice kicker on the upside.

[goodasgold]

This new type of fraud has me concerned. I was thinking of buying a few coins, but now I will wait until a secure method is developed to weed out the fakes.

And there is another worrying aspect. Gold funds will be vulnerable to fraud as a few crooked fund employees will receive bribes to accept fake coins. Once the fake coins are in the vault, mixed in with the legit coins, it will be difficult to detect the fraudsters. Not a pleasant situation.

The ancient rule is, "bad money drives out good." 

[rickb]

This new type of fraud has me concerned. I was thinking of buying a few coins, but now I will wait until a secure method is developed to weed out the fakes.

And there is another worrying aspect. Gold funds will be vulnerable to fraud as a few crooked fund employees will receive bribes to accept fake coins. Once the fake coins are in the vault, mixed in with the legit coins, it will be difficult to detect the fraudsters. Not a pleasant situation.

The ancient rule is, "bad money drives out good." 

The gold etfs don't deal in coins, which are pretty darn difficult to fake convincingly (the tungsten filled coins that started this thread apparently look obviously fake if you know what a real one is supposed to look like), but in 400 oz gold bars - which are much easier to fake (you coat a tungsten "blank" with as much gold as necessary to be able to create the fabricator stamp - or drill out a real bar and fill it with tungsten).

IMO, this is very serious risk with the ETFs.  Not so much if you buy gold coins which you can actually see and hold yourself.  My understanding is a tungsten coin kind of goes "thud" if you drop it and doesn't sound even remotely real.

[Mark Leavy]

This new type of fraud has me concerned. I was thinking of buying a few coins, but now I will wait until a secure method is developed to weed out the fakes.

Maybe I wasn't clear in my earlier post.
Audio Spectrum is 100% accurate.

If it even remotely looks like an Eagle, then if the audio spectrum has the three spikes in the right place, it IS an Eagle.  Realistically, you don't even need the iPhone app - your ear is pretty damn good.  Drop your known good eagle a couple of inches onto the counter, do the same with the "Device Under Test".  Impossible to fake.

If the app that I mentioned earlier is too expensive, then pick another one.  It's a very simple function and any "audio equalizer" type of app should work just fine.

You can test this with your pocket change.  Drop some quarters and dimes and pennies.  Every year that they changed the metal content produces a different audio signature.  It's clear and obvious.

[dualstow]

What does "slabbed" mean?

[Early Cuyler]

What does "slabbed" mean?

A slabbed coin is one that has been graded and encapsulated by a major grading service such as pcgs or ngc.

[MachineGhost]

A slabbed coin is one that has been graded and encapsulated by a major grading service such as pcgs or ngc.

And they are tamper proof, or at least show evidence if it's been tampered.

[dualstow]

Thank you both.

[craigr]

IMO. My preference is always for coins that are not in sealed packages. If someone is able to put out passable tungsten coins, they are able to forge packaging. I want to be able to handle the coins and take a good look at them without being in a blister pack.

In terms of tungsten fakes from China, this has been on the radar for years. Sad to see it is coming to this, but it's kind of par for the course for China in terms of how they view property rights and ethics.

[craigr]

This new type of fraud has me concerned. I was thinking of buying a few coins, but now I will wait until a secure method is developed to weed out the fakes.

Maybe I wasn't clear in my earlier post.
Audio Spectrum is 100% accurate.

If it even remotely looks like an Eagle, then if the audio spectrum has the three spikes in the right place, it IS an Eagle.  Realistically, you don't even need the iPhone app - your ear is pretty damn good.  Drop your known good eagle a couple of inches onto the counter, do the same with the "Device Under Test".  Impossible to fake.

If the app that I mentioned earlier is too expensive, then pick another one.  It's a very simple function and any "audio equalizer" type of app should work just fine.

You can test this with your pocket change.  Drop some quarters and dimes and pennies.  Every year that they changed the metal content produces a different audio signature.  It's clear and obvious.

I really like this idea. A coin that could pass size, weight, and audio checks would be extremely difficult to fake.

[craigr]

One question to the bullion dealers, etc. Couldn't various inspection techniques involving ultrasound, etc. detect tungsten vs. real gold?

Also for Bron, doesn't Perth Mint melt down all the gold you receive and strike new bullion? If so, this kind of threat for the Perth Mint would never make it into your circulation, correct?

[craigr]

Some gold dealer shows some fake Eagles that came into his store.  These are pretty good fakes.  Scary!

https://www.youtube.com/watch?v=2P1h6uXDACY

The fake coins have horrible detail. The edges were too sharp. Even when he dropped it briefly on the table you could hear that it was not real immediately. That is by far the best way to quickly tell a real from the fake as Marc points out.

I still think sticking to larger reputable dealers you will avoid a lot of this trouble. These dealers handle so many coins that it would be hard to get a fake by them initially, let alone into customer circulation. They would have their business wrecked if word got out that they were shipping fakes and it is likely they are going to be very careful now that these threats are out there.

[craigr]

BTW. I talked about tungsten gold coins being sold in China as souvenirs in the Gold FAQ several years ago, but a quick look at Alibaba shows that it's really ramped up since then:

http://www.alibaba.com/showroom/gold-pl ... -coin.html
http://www.alibaba.com/product-detail/2 ... 34665.html
http://www.alibaba.com/product-detail/C ... 5.html?s=p

[dualstow]

BTW. I talked about tungsten gold coins being sold in China as souvenirs in the Gold FAQ several years ago, but a quick look at Alibaba shows that it's really ramped up since then:

http://www.alibaba.com/showroom/gold-pl ... -coin.html
http://www.alibaba.com/product-detail/2 ... 34665.html
http://www.alibaba.com/product-detail/C ... 5.html?s=p

I bet the buyers of those coins are getting ripped off. Heard it's not even real tungsten these days.

;-)

[FarmerD]

I went through all the tungsten coins they sell and I see they have Eagles, Buffalos, Maples, Krugerands, and Kangeroos.  The Chinese obviously allow counterfeiting of foreign coins but not coins produced at their mint so you don't see any fake Pandas on Alibaba.  I also didn't see any Philharmonics - maybe this is because it's so difficult to fake a really thin coin like the Phil.

[bronsuchecki]

Also for Bron, doesn't Perth Mint melt down all the gold you receive and strike new bullion? If so, this kind of threat for the Perth Mint would never make it into your circulation, correct?

All metal used for our production comes from our refinery so we know it is pure. Also any coins or bars we buy we generally melt and we haven't seen any fakes, although to be fair I suppose fraudsters would not try and pass off fakes to us knowing we would melt them down. Having said that, if fakes were in wide circulation (due to being indishtinguishable from genuine coins), then we would see fakes from time to time given the amount of metal we buyback from the market.

So I think these fakes are obvious to bullion dealers and rarely circulate past the first person who got sucked into buying them.

Putting a plug in for our coins, I would note that trying to fake a 99.99% pure gold coin with polished surfaces, like the Perth Mint Kangaroo, is a lot harder than a 22ct mass production gold coin. I'd be surprised if you will get caught buying new coins from a reputable coin dealer.

[kapoios]

Usually I buy gold sovereigns and gold 20 franc coins.  I haven’t seen tungsten fakes but I have seen other fakes some even made from 18K – 22K gold. In most cases it is easy to spot a fake if the coin is in mint state. It’s getting more difficult if the coin is worn out and in some cases you just can’t be sure if a specific coin is genuine or fake so you avoid it.

[Libertarian666]

Usually I buy gold sovereigns and gold 20 franc coins.  I haven’t seen tungsten fakes but I have seen other fakes some even made from 18K – 22K gold. In most cases it is easy to spot a fake if the coin is in mint state. It’s getting more difficult if the coin is worn out and in some cases you just can’t be sure if a specific coin is genuine or fake so you avoid it.

If what you're buying is a bullion coin, it shouldn't matter if it's "real" or "fake", as long as it's made of the right alloy, which it will be if it passes the weight, size, and ring tests.

By the way, it was apparently pretty common to use the ring test many years ago when real money was still in circulation, at least if one can go by Heinlein's counterfeit coin scene in "Job: A Comedy of Justice".

[jco]

I think slabbed are not ideal as there are numerous fake slabs known. Besides it puts a barrier between you and measuring the density, dimensions and sound.

Some gold dealer shows some fake Eagles that came into his store.  These are pretty good fakes.  Scary!

https://www.youtube.com/watch?v=2P1h6uXDACY

Crank the resolution to 1080, I could easily tell that was a fake the first second I saw it... While it is a little disturbing that the density and dimensions are *allegedly* accurate, that fake looks terrible... Like all the others I've seen. Still, how far off can good ones be.