PERHAPS YOU RECALL movies about the Old West, wherein a shady-looking character would offer to exchange a Gold Coin for a horse, and the seller would bite down on the coin to verify its authenticity, writes Doug Hornig, editor of Big Gold for Casey Research.
That was about all you could do with a Gold Coin if you lacked proper assaying equipment and had to make a snap judgment. Depend on your teeth to tell you whether the metal in your hand was sufficiently soft to be genuine gold.
The bite test is actually a pretty good one, because gold – despite being among the heaviest metals – is also very soft. If you chomp down and shatter a tooth, it isn’t gold in short
But before you go munching on your own Gold Coin collection, you might want to ask yourself, why bother? Well, because of the internet.
You see, while the net has become an indispensable resource and we’d never want to return to the days when basic research meant a long day in the library, it also has the ability to stir up a hornet’s nest of concern at the drop of a stick.
One such hornet release followed the recent publication of a three-part series by Coin World, dealing with the subject of coin counterfeiting in China – where making fake coins just happens to be quasi-legal.
Instantly, the web was buzzing with the worries of bloggers and eBay shoppers, and the pontifications of pundits about this dire threat. But before we got too worked up about it, first thing we did was carefully read the source material.
Yes, the Coin World articles raise the issue, and they feature an in-depth interview with one Chinese counterfeiter, although that’s not what he calls himself. He’s a proud artisan who produces replicas. Of what? As it turns out, it’s primarily copies of ancient Chinese coins, which are sold to tourists. A few fake US silver dollars are put up each week on eBay, but they are required to carry a Replica stamp.
Do all Chinese counterfeiters abide by this regulation? Perhaps not. But eBay has always been a place where caveat emptor rules, so the best policy would probably be simply to avoid coin purchases from China.
Looking further at this problem, however, and consulting with leading US dealers, we asked if they come across many fake bullion Gold Coins – such as Eagles or Maple Leafs. The answer was no. They’ve only seen a handful during their thirty years in business.
Not that it’s hard to do. With modern 3-D laser imaging, a die can be created that mimics the real thing in perfect detail. The good news is that it’s impractical. The difficulty is that any counterfeit bullion coin would likely have to be gold in order to pass.
If it were pure, then the profit margin would be too small to make the deal worthwhile. And if the counterfeiter skimped on the gold content, the coin’s weight would be a dead giveaway.
The only alternative would be to gold-plate a coin made out of some other metal. But again, getting the weight right while preserving the correct size would be a challenge.
Which brings us to the areas where counterfeiting can be a real problem. The most significant is rare coins.
Rare Gold Coins can be mimicked with the proper gold (or silver) content, then artificially aged so that only an experienced numismatist could pick them out. Because of the premium they command, rare coins made with real gold would be highly profitable, whereas a simple bullion coin (such as Krugerrands, Maples or Eagles) would not.
This is one of the reasons why many collectors will only trade coins graded and slabbed by third-party specialists like American Numismatic Association Grading Service Professional (ANACS), Coin Grading Service (PCGS), or Numismatic Guaranty Corp. (NGC). Ominously, though, some counterfeit coins are turning up inside phony slabs. If you collect rare coins and have any reason to suspect them, it’s pretty easy to sort the real slabs from the fakes. Coin World provides illustrations on just how to do that.