Counterfeit rare coins frustrate local dealers

Chinese counterfeiters are minting U.S. rare coins that appear to be more than a hundred years old.

In late April, U.S. customs investigators in Chicago intercepted a shipment of hundreds of fake coins from China with dates between 1873 and 1878. Some of the worthless coins would have been sold for more than $2000 a piece according to federal officials.

"Once I buy a counterfeit it gets retired in my collection," said Paul Rigby who owns a coin shop in Multnomah Village. It's a collection Rigby would rather not have, but he says it's no longer uncommon for customers to bring in counterfeit coins.

"He just walked into the door of the shop and showed it to me and I offered $1,500," said Rigby.

The one-ounce gold panda coin looks real, but after weighing it, he learned it was only 7/10 of an ounce.

There's also a good chance it's not solid gold. Either way, it's worthless. It's a mistake he now uses to educate his customers.

Even buying gold and silver in 100 ounce bars can be risky. Federal investigators say tungsten filled gold bars and lead filled silver bars have started to circulate in the U.S. With gold at $1500 an ounce, counterfeiters are getting extremely creative.

Paul Rigby says it's a difficult thing to tell his customers the coins they think are worth thousands are fake and worthless.

"They take it pretty hard and most of them say they got the coins from relatives or they bought them on the Internet," said Rigby. Selling counterfeit coins is a federal offense.

A few notes here. First there's a big difference between "fake gold" and "fake silver" and "fake coins."

Most of the Chinese counterfeit coins today are made of real coin silver (90% Silver/10% copper) and real gold. They are counterfeiting rare issues with much higher numismatic value, well above the market price of the metals. And they are making them with 100% genuine material (although it's of modern origin). Some of the counterfeits are laughable. Some our outright fantasy coins which never existed in genuine form. Others, have much more subtle differences from the real items. And they are getting better every day. When they finally figure out the proper dies and combinations, they will be able to make counterfeits which are nearly undetectable.

Spotting an older counterfeit "fake silver" coin is pretty easy. Lead coins, even with silver plating, will be incorrect weight or incorrect size. Also, if you rub the edge of the coin on paper and "write" with it, you get a tell tale black line after a stroke or two, instead of a shiny silver line.

Spotting modern Chinese counterfeits, made from actual 90% silver is much, much harder. I would say that buying slabbed, "certified" coins is a good protection for the average person, but the Chinese are actually getting good at counterfeiting those plastic cases and holograms, too.

And the Secret Service has been very lax in going after these counterfeits. They often try to use some excuse about only persuing people for counterfeiting current "legal tender" of the United States. They often don't seem to care about historical coins which are not in current use and current cicrulation.

Gold coins have been faked for many, many years. And they are usually faked with some actual gold in the alloy, although, they tend to use lower grades (10kt or even lower quality for coins that should be 24kt, 22kt or 90% "coin gold"). Even here, some of the older fakes that I've seen were made from genuine gold (24kt or 22kt as appropriate for the issue), but were copies (not quite 100% accurate) of rare coins with numismatic value well above the value of the metal. Careful measuring with a good caliper set and precise weighing will spot many of the older fakes. However, the newer Chinese counterfeits tend to be correct in both diameter and weight. To detect those, a highly knowledgeable person will need to check all the details on the coin for correctness.

Tungsten is a big issue for "fake gold," but it's more commonly been discovered in counterfeit bars in larger sizes, where the payoff is bigger. There have been many rumors of tungsten filled (typically 400 troy ounce) "good delivery bars." Tungsten (pure tungsten, not the tungsten carbide alloys commonly found in tools) is very close to gold in weight per cc of volume. It's about 1/4 of a percent difference in weight per volume. This makes it virtually undetectable, unless you drill several holes all the way through the bar. Tungsten (even pure tungsten) is much harder than gold. If you are drilling, you'll know the difference immediately when you hit it.

Actually, one of the fears of many "gold bugs" about gold ETF's is that they generally disclaim and disclose that there could be a loss of value in the fund if any of their holdings are found to be fake. Combine that with the fact that some large precious metals ETF's have been "purchasing" prescious metals at rates exceeding world wide production for long runs of consecutive years, and there's probably a legitimate concern about some of those funds.

I get a kick out of the adverts for US gold and silver coinage. “Guaranteed by the government for weight, content, and purity.”

Really? Think about this for a moment. Legitimate coins are certainly guaranteed to be, well, legitimate. However, if someone were to discover one of their coins were fake, the government wouldn’t replace it with an authentic coin. The public cannot buy bullion coins directly from the mint except for special “proof” collector versions. In those instances maybe there is some kind of protection but for the most part gold and silver coins are purchased and sold and resold many times over through all kinds of dealers and private parties.

Can’t understand why anyone would even consider a Panda, given the level of counterfeiting of designer goods and other products. The average person who wants to buy some gold should stick with US or Canadian government-issue bullion coin, no collector or numismatic stuff, or bars, dust, nuggets, etc.

I get a kick out of the adverts for US gold and silver coinage. “Guaranteed by the government for weight, content, and purity.”

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